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S.&P. Says Argentina Has Defaulted

dealbook.nytimes.com

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Re: S.&P. Says Argentina Has Defaulted

#51

Post by _ouxp »

djKianoosh wrote: post #23
_ouxp wrote: post #16

Earlier quoted context omitted.

I don't see how this adds to the conversation. Also, Argentina and Uruguay have similar racial composition & as far as I can tell see themselves as the same people of the Rio Plata.

Not to bring too many facts into the discussion, but Uruguay and Argentina dont have similar racial composition: http://www.indexmundi.com/uruguay/demographics_profile.html http://www.indexmundi.com/argentina/demographics_profile.htm... Uruguay have 12% non-white, Argentina only 3% That's not what I would call "similar".

Sorry, I should have been clearer: they are predominantly white. When I was last in each country, I didn't get any real sense of deep hatred of each other. Though there was some seemingly good natured ribbing about who was better at e.g. asado.

Re: S.&P. Says Argentina Has Defaulted

#52

Post by PeterisP »

jacquesm wrote: post #43
manishsharan wrote: post #4

Wow ! Just one investor can bring a country to its knees !

Investor is too kind a term. They did not exactly buy those papers at nominal value.

Well, given all this hassle, the papers weren't worth nearly their nominal value - and they actually gave money to the original lender, while Argentina didn't; so on that regard they're more fair than Argentina's government at least.

Re: S.&P. Says Argentina Has Defaulted

#54

Post by arethuza »

Nursie wrote: post #32

So in the coming days we'll be hearing a lot more about 'Las Malvinas' and how Britain is an evil colonial power and stole the islands? That usually seems to be what happens when Argentina has internal problems that need to be distracted from.

Rather off topic - I watched the World Cup Final in a large crowd at a German owned resort in Turkey, with a lot of Germans, English, Turks and a handful of Scots (us).

Everyone supported Germany apart from the English who supported Argentina - which rather surprised me :-)

Re: S.&P. Says Argentina Has Defaulted

#55

Post by opendais »

PeterisP wrote: post #47
opendais wrote: post #21

Argentina should never have handled the bonds under NY law and without control of the bondholder's list. That mistake is costing them dearly. The only reason they can't pay everyone but the holdouts [e.g. selective default] is because of the fact they handled them under NY law after the 2001 default. :/

If they hadn't ceded the legal control to NY law, then they either wouldn't have gotten the money they wanted, or at the very least had a much higher interest for it. That's the whole point - if you're a trustworthy borrower, then you can get money on decent terms; but if you're like Argentina then every lender needs all the protection they can get, to try to prevent cases like this one.

The point is, they are getting hit multiple times with the "untrustworthy borrower bat" for a single incident in 2001 and are now being forced to screw all of their borrowers and not just the ones who refused to play ball in 2001. Because NY law.

That is like saying "Oh, you can pay none of your debts until you pay the ones you defaulted on already in 2001."

Nope.jpg.

That is f'ed up.

They defaulted in 2001. You don't get to come back and say "Oh, but you have to pay us anyway or we will not let you pay the debts since then either."

EDIT: I'm amused by the downvotes given that is how bankruptcy law works most places. You default one time. The zombie borrowers don't get to come back later and demand money later, enforced by the courts.

Re: S.&P. Says Argentina Has Defaulted

#56

Post by pessimizer »

I don't understand why S&Ps rating matters, except for in the cases of US state or federal investments where some of the ratings agencies have been written into statute. Everybody is as familiar with the Argentinian situation and how it has developed as S&P is, and they have the ability to make their own judgements about whether they want to buy Argentinean bonds.

The danger to Argentina is that the US government has declared that they're holding hostage the bond payments that Argentina has agreed to and wishes to make.

Re: S.&P. Says Argentina Has Defaulted

#57

Post by lmm »

johnnyg wrote: post #9
manishsharan wrote: post #4

Wow ! Just one investor can bring a country to its knees !

Wouldn't it be more fair to say endemic corruption and decades of misguided plans that swung too hard to socialist, then capitalist and then again socialist policies created this? The idea that the root cause of this is that a group of investors come along, buy debt on the open market and then expect that debt to be paid seems overly simplistic.

> Wouldn't it be more fair to say endemic corruption and decades of misguided plans that swung too hard to socialist, then capitalist and then again socialist policies created this?

It would be fair to say that those caused the 2001 default. Which was a real default, but not a catastrophe; defaults happen sometimes, Argentina negotiated a settlement with (most of) its creditors (who had known all along that their investments carried a certain risk), and life went on.

What we have now is a tragedy where the overwhelming majority of Argentina's creditors were reasonable, accepted the settlement, and want to get paid, and Argentina has the money and wants to pay them. But the "vultures" are using a legal technicality to stop that payment from going through, in the hopes of extorting more money from Argentina. And sadly the US legal system is abetting this.

Re: S.&P. Says Argentina Has Defaulted

#59

Post by PythonicAlpha »

nabla9 wrote: post #28
johnnyg wrote: post #9

Earlier quoted context omitted.

Wouldn't it be more fair to say endemic corruption and decades of misguided plans that swung too hard to socialist, then capitalist and then again socialist policies created this? The idea that the root cause of this is that a group of investors come along, buy debt on the open market and then expect that debt to be paid seems overly simplistic.

Defaulting is error on both sides, the borrower failed in risk analysis just like the debtor. The problem is that sovereign nations don't have clear bankrupt procedure and these hedge funds are holding country as hostage for their past mistakes despite the fact that majority of borrowers accepted debt restructuring that was arranged and accepted haircuts. If the debt and its interest grows past what country gdp can e…

I see it similar. That is also the reason, that countries with high risk are paying much higher interest rates. Those rates are always defined as "payment" for the risk of loss. So it is a little weird, when funds now find a way to get out of the risk and earn 16x the money they spent, just because of their good arguing before some courts.

Re: S.&P. Says Argentina Has Defaulted

#60

Post by [deleted] »

pessimizer wrote: post #56

I don't understand why S&Ps rating matters, except for in the cases of US state or federal investments where some of the ratings agencies have been written into statute. Everybody is as familiar with the Argentinian situation and how it has developed as S&P is, and they have the ability to make their own judgements about whether they want to buy Argentinean bonds. The danger to Argentina is that the US government has…

[deleted]
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