Today is the day that Paul Singer and his Elliot Capital Management team have been waiting for. Thanks to SCOTUS’ decision, as Bloomberg reports, Argentina is poised to miss a bond payment today, putting the country on the brink of its second default in 13 years, after a U.S. court blocked the cash from being distributed until the government settles with creditors from the previous debt debacle. The decade-long battle between Argentina and holdout creditors from the country’s $95 billion default in 2001 is coming to a head as the judge’s decision “closes Argentina’s options to finally force it to negotiate,” and “should now stop using these delay tactics and get serious.” Argentina sees it a different way, the ruling “is merely a sophisticated way of of trying to bring us down to our knees before global usurpers,” according to the economy minister Axel Kicillof.
Amid all this, Argentina’ MERVAL remains near all-time record highs… (as equity hopes of devaluation trump bond fears of default)
As Bloomberg notes, if non-payment were to occur today, default would not be officially triggered yet (forcing Argentina’s hand to negotiate)…
The nation has a 30-day grace period after missing the $539 million debt payment to seek an accord with a group of defaulted bondholders led by billionaire Paul Singer’s NML Capital Ltd. and prevent a default on its $28.7 billion of performing global dollar bonds. Both Argentina and NML have said that they’re open to talks.
A decade-long battle between Argentina and holdout creditors from the country’s $95 billion default in 2001 is coming to a head.
The judge’s decision “closes Argentina’s options to finally force it to negotiate,” said Jorge Mariscal, the chief investment officer for emerging markets at UBS Wealth Management, which oversees $1 trillion. “Argentina should now stop using these delay tactics and get serious.”
But Argentina is not happy…
The ruling “is merely a sophisticated way of of trying to bring us down to our knees before global usurpers,” Argentina said. “But he will not achieve his goal for quite a simple reason: The Argentine Republic will meet its obligations, pay off its debts and honor its commitments.”
In an e-mailed statement, the Economy Ministry said Griesa is abusing his power and acting outside of his jurisdiction as the restructured bonds are not part of the holdouts’ case.
“A judge is trying to impede a debtor from carrying out its obligations and creditors from getting paid,” the ministry said.
Elliott is hopeful…
Jay Newman, a money manager at Elliott’s NML Capital, said in an interview, “We are hoping to have the opportunity to negotiate with Argentina.”
We will see… can the world’s fragile rehpothecated markets handle a technical default on near $30bn? For now, no one seems worried.
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