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Donnerstag, 28. Februar 2013

Reuters Why Argentina will default in 2013 Thursday, February 28, 2013 By Felix Salmon

Debt Coverage:
Bloomberg: “Argentina Says It Won’t Voluntarily Comply With Bond Ruling”
Reuters: “Why Argentina will default in 2013” (Felix Salmon)
DealB%k: “Argentina’s Bond Case Is Being Closely Watched for Ramifications”
BBC: “Argentina tells court it will resist debt demands”
ABC News (AP): “Q&A: Argentina's NY Court Showdown on Default Debt”
Reuters: “Argentina stands by refusal to pay holdout creditors: hearing”
Seattle Times (AP): “Argentina, creditors face off in NY over debts”
The Wall Street Journal: “Argentina, Creditors Group Face Off”
DPA-Infocom: “Background: Argentina vs. hedge funds – Debt dispute heads for a showdown”
(Original in German)
Jubilee: “The Debt ‘Trial of the Century’ – Vulture Hedge Funds v. Argentina”
Thursday, February 28, 2013
By Bob Van Voris and Christie Smythe
Argentina’s claim that a U.S. court can’t tie its obligation to make defaulted bondholders whole to payments on restructured debt faced skepticism from judges as a lawyer for the country said it won’t obey orders to pay as much as $1.3 billion of defaulted sovereign debt.
Jonathan Blackman, the attorney for the South American nation, said yesterday that Argentina would default on its restructured debt if it’s forced by a three-judge appeals panel in New York to pay holders of the defaulted debt.
Thursday, February 28, 2013
By Felix Salmon
Some countries default on their performing debt because they no longer have the ability to pay it. Other countries default on their performing debt because they no longer have the willingness to pay it. Argentina has been in both situations: something of a serial defaulter, it defaulted on or restructured its obligations in 1828, 1890, 1982, 1989, 2001, and 2005.
And it’s going to default once again in 2013.
Wednesday, February 27, 2013
By Peter Eavis
A federal appeals court on Wednesday heard impassioned arguments from two of the nation’s most prominent lawyers in a case that pits a group of bond investors in a long-running battle with the country of Argentina.
Legal specialists who observed the proceedings at the United States Court of Appeals for the Second Circuit in Manhattan said they felt that the judges showed little sympathy for Argentina, which is refusing to make payments on the disputed bonds.
Wednesday, February 27, 2013
Argentina has signalled to a US court that it will resist demands by a group of investors to repay them in full 11 years after its huge debt default.
A New York appeals court was hearing arguments after a previous ruling that Argentina should pay $1.3bn (£857m).
Argentina refuses to pay anything to investors who declined to participate in a previous debt reduction deal involving most of the nation's lenders.
ABC News (AP)
Wednesday, February 27, 2013
By Michael Warren
Judgment day is approaching in an epic battle between Argentina and New York billionaire Paul Singer, who has sent lawyers around the globe trying to force the South American country to pay its defaulted debts.
Three U.S. appellate judges hear oral arguments in New York on Wednesday in the case, NML Capital Ltd. v. Argentina. The case has shaken bond markets, worried bankers, lawyers and diplomats, captivated financial analysts and generated enough "friend of the court" briefs to kill a small forest.
Wednesday, February 27, 2013
By Nate Raymond and Daniel Bases
(Reuters) - Argentina faced tough questions on Wednesday from a U.S. appeals court over its stance toward a group of dissident bondholders, a legal showdown that has sparked fears the country could have its second massive debt default in 11 years.
The 2nd U.S. Circuit Court of Appeals in New York heard more than two hours of arguments as it weighs whether to reverse an order that the Argentine government pay $1.3 billion to the so-called holdouts, led by Elliott Management affiliate NML Capital Ltd and Aurelius Capital Management.
The Seattle Times
Wednesday, February 27, 2013
By David Caruso
The Republic of Argentina squared off with a group of U.S. hedge funds Wednesday in a court case that has the potential to unravel deals the South American country made to get out from under a $100 billion pile of bad national debt.
The Republic of Argentina squared off with a group of U.S. hedge funds Wednesday in a court case that has the potential to unravel deals the South American country made to get out from under a $100 billion pile of bad national debt.
The Wall Street Journal
Wednesday, February 27, 2013
By Chad Bray and Dan Strumpf
Argentina and a group of its creditors had their latest legal clash before a U.S. appeals court Wednesday in a long-running dispute stemming from the South American nation's decision to default on its debt more than a decade ago.
Argentina, which defaulted on $100 billion in debt in 2001, had agreed to restructure about 92% of its debt, but a group of creditors who declined to participate in prior debt swaps are suing for full repayment in U.S. court.
Background: Argentina vs. hedge funds – Debt dispute heads for a showdown
Wednesday, February 27, 2013
New York. The legal dispute that has been raging for years between Argentina and two aggressive US hedge funds is entering was is likely to be the last round. For more than ten years, Argentina has refused to pay bond debt held by investors. If the country, which went bankrupt at the beginning of the last decade, remains true to its position, this could become very expensive – because the opponents are two aggressive financial speculators – NML and Aurelius – who are known for being relentless to bankrupt countries. On Wednesday the parties will meet before an appeals court in New York – maybe the last stop on a long journey through the justice system.
Both of the hedge funds, NML Capital from the empire of the American billionaire Paul Singer and Aurelius Capital Partners, are already specialized in exploiting debtors that are at rock bottom. This is precisely why they bought Argentinean government bonds at record low prices before the country filed for bankruptcy at the end of 2001. The funds insist on full repayment. They don’t make any compromises in collecting debts. Argentinean state assets are being hunted around the world by an army of lawyers. Last fall they succeeded in having an historical school sailing ship seized in Ghana – a symbolic coup. Recently the hedge funds scored two victories before the court – for this reason the South American country can’t service other debt. Anyways, the country has enough other problems. Argentina’s government leader, Cristina Kirchner, is fighting high inflation and low growth. The middle class is protesting against corruption, bureaucracy and mismanagement. And Argentina is the first country every to be reprimanded by the International Monetary Fund (IMF) for manipulating data on inflation. And then there are the hedge funds from New York.
In the dispute with the funds, which government representatives refer to as “vultures,” an advantage from the time before the debt rescheduling is turning into a big disadvantage. The reason that the South American country has to let itself be dragged before a court in New York in the first place is due to the fact that it wanted to make itself attractive for international investors with securities issued under US law. Up to now, however, Argentina has been having a hard time in New York. District Judge Thomas Griesa has already upheld the plaintiffs’ complaints twice. At the end of October, he ordered Argentina to pay the disputed amount of USD 1.3 billion to the hedge funds. Griesa also forbid the country from servicing the debt vis-à-vis its other creditors until they pay what they owe to Singer and Co.
This puts Argentina in a tight spot. In short, the judge’s ruling results in the following: If Argentina doesn’t pay its debt with the hedge funds, it can’t service the remaining bonds in the amount of USD 24 billion. It’s therefore a matter of all-or-nothing, but the latter would formally imply a payment default; that is, a technical government insolvency.
Argentina succeeded in suspending the ruling until February 27, which gives it time to present new arguments. However, the problem is that there are hardly any. It’s not because of a lack of money. For this reason, the government continues to mainly rely on grounds that the decision represents an attack on government immunity. This isn’t very convincing, writes a study by the law firm Shearman & Sterling, because this objection was already overturned in October. Ultimately it will probably have less to do with whether Argentina pays its stubborn creditors but rather how and when.
In the opinion of analyst Joseph Cotterill, who dealt with the conflict in the renowned financial blog “Alphaville” in the British “Financial Times,” however, there could still be straws that Argentina could grasp at. These involve the remaining bond creditors and the Bank of New York Mellon, both of which are on the side of the government. The reason for what seems at first glance to be a strange constellation of interests is that the interest payments for the other bond holders flow via the bank. Judge Griese had threatened to simply seize the money for the hedge funds there if Argentina continues to refuse to pay them. Obviously the real addressees don’t like this. However, the bank is fighting back and argues that it is a neutral institution that is only doing its job.
If the appeals judges rule in favor of the objection, the creditors, which have already waived a large share of their outstanding claims, could be serviced after all, avoiding the long arm of hedge funds. According to Cotterill, the group of investors, which had the money squeezed out of them, could be one reason why in the end the judges could abstain from making a tough decision against Argentina.
Buenos Aires will probably remain stubborn in any case and has already made this clear. Recently the government suggested that it might offer the old bonds again to reschedule debt. However, it’s unlikely that the “vulture” funds would agree to this because they have never been this close to their goal before. Argentina has already announced that it will go all the way to the US Supreme Court if need be.
However, experts doubt that they would even accept such a lawsuit. As a result, the decisive hearing could take place this evening already – the showdown starts on Wednesday at 8:00pm (CET). The parties have 15 minutes each to convince the judges.
Wednesday, February 27, 2013
By Jennifer Tong
Today, two holdout vulture funds, including Paul Singer’s NML Capital, are in a New York Federal court versus Argentina. The Financial Times has dubbed the proceeding the “‘the trial of the century’ in sovereign debt restructuring.” The US Government filed a friend-of-the-court brief noting a ruling against Argentina could make it much harder for countries in financial recovery or countries facing economic stresses to access credit and debt swaps.
The faith community and other groups, organized by Jubilee USA, will vigil out of concern for poor people affected by vulture funds during the proceeding outside the Federal 2nd Circuit Court of Appeals Wednesday, February 27th starting at 1:00 PM in New York City.  Vigils will also take place in London and Buenos Aires.
The Wall Street Journal
Wednesday, February 27, 2013
By Ken Parks
BUENOS AIRES--Argentina's benchmark government bonds closed with modest losses on Wednesday, as investors followed a court case whose outcome might lead the South American country to default on billions of dollars in bonds.
On Wednesday, lawyers representing Argentina and creditors presented oral arguments before a three-judge panel of the U.S. Second Circuit Court of Appeals in New York.
The Argentine government asked the panel to convene the court's full chamber of justices to consider overturning a lower court ruling that blocks Argentina from paying creditors who swapped defaulted Argentine bonds for new bonds in heavily discounted debt exchanges unless it also pays those investors who are suing for full repayment.

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