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S.&P. Says Argentina Has Defaulted

dealbook.nytimes.com

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Re: S.&P. Says Argentina Has Defaulted

#91

Post by blowski »

pessimizer wrote: post #86
blowski wrote: post #80

Earlier quoted context omitted.

I can see both sides here. What surprised me is not that a judge has decided, but that a US judge has decided. It looks like an American judge decided in an American corporation's favour, and against a poorer country, to hell with the damage it will do the world's economy. On the other hand, if the US doesn't uphold the law, then the world economy would be damaged because lending would become more unpredictable. As i…

I just edited my comment to double down due to downvotes, but this ruling will ultimately damage the US more than Argentina. If we establish that it will be impossible to restructure debt if you issue your bonds in the US, we've established that there's no reason to issue your bonds in the US. edit: it's important to keep in mind that 93% of bondholders have agreed to the restructuring. The courts look like they're s…

I actually downvoted you because the world `holdup` made it sound a bit inflammatory. Having read the links, I see where you're coming from, and changed to an upvote. This is certainly one of those topics that sensationalists will try to reduce to easy answers, when it's clear there aren't any.

Re: S.&P. Says Argentina Has Defaulted

#92

Post by pessimizer »

blowski wrote: post #91
pessimizer wrote: post #86

Earlier quoted context omitted.

I just edited my comment to double down due to downvotes, but this ruling will ultimately damage the US more than Argentina. If we establish that it will be impossible to restructure debt if you issue your bonds in the US, we've established that there's no reason to issue your bonds in the US. edit: it's important to keep in mind that 93% of bondholders have agreed to the restructuring. The courts look like they're s…

I actually downvoted you because the world `holdup` made it sound a bit inflammatory. Having read the links, I see where you're coming from, and changed to an upvote. This is certainly one of those topics that sensationalists will try to reduce to easy answers, when it's clear there aren't any.

http://www.cepr.net/index.php/blogs/the-americas-blog/argent...

Here's another link.

edit: and another - http://www.forbes.com/sites/realspin/2013/12/19/the-real-fac...

Re: S.&P. Says Argentina Has Defaulted

#93

Post by davidw »

blowski wrote: post #80
pessimizer wrote: post #63

Earlier quoted context omitted.

That's what it would be like if this were anything but a holdup. The US government is intervening in the market and preventing bondholders who have agreed on a change in rules from receiving their bond payments, rather than letting the market set the prices. That's the opposite of what you describe here. edit: What I'm saying is only crazy within the bubble of this thread. It's also the opinion of the US government a…

I can see both sides here. What surprised me is not that a judge has decided, but that a US judge has decided. It looks like an American judge decided in an American corporation's favour, and against a poorer country, to hell with the damage it will do the world's economy. On the other hand, if the US doesn't uphold the law, then the world economy would be damaged because lending would become more unpredictable. As i…

A portion of the bondholders who had renegotiated their debts are from the US too, and are now wondering what's going to happen.

Re: S.&P. Says Argentina Has Defaulted

#94

Post by PeterisP »

manishsharan wrote: post #4

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

Well, Argentina could've paid their debt to that investor yesterday, and it wouldn't be defaulting now. It was their intentional choice, they had an ability to pay but didn't want to pay to them.

Re: S.&P. Says Argentina Has Defaulted

#95

Post by arjunnarayan »

pessimizer wrote: post #75
sz4kerto wrote: post #65

Earlier quoted context omitted.

> I don't understand why S&Ps rating matters Because it's part of many private contracts and financial products. (E.g. 'in case the S&P rating of entity X drops below Z, then [...]').

Thanks. Is this generally something that's written in to qualify for doing business with the state, or something that private investors look for?

Both. A lot of large institutional investors (like pension funds) have statutory limits on the percentage of the portfolio that can be allocated to riskier investments. Risk is sometimes defined by the S&P rating.

Re: S.&P. Says Argentina Has Defaulted

#96

Post by opendais »

PeterisP wrote: post #84
opendais wrote: post #55

Earlier quoted context omitted.

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'…

The reason that they can demand money is that those bonds have a requirement that Argentina will pay all bondholders equally - even if they pay x% of it, then they have to pay every bondholder x%, instead of paying some bondholders more and some less or nothing. Now Argentina is paying money to some of those old bondholders according to the restructured debt that Argentina itself agreed to. However, all other bondhol…

> However, all other bondholders - including some that Argentina dislikes and doesn't want to pay - have a valid claim on that money, according to that initial rule. That's it.

That isn't it. Those "bondholders Argetina dislikes" are asking for more money than the rest and are demanding the full value for bonds that all the other bondholders agreed to take a haircut on in 2001.

You don't get to go back and demand full value on debt that was restructured for everyone else. That is like if I declared bankruptcy and one of my credit card companies held out for full payment on the debt when all the others had already signed off on X% of the debt.

That credit card company wouldn't be able to do it but these bondholders can because they found the right judge.

Re: S.&P. Says Argentina Has Defaulted

#97

Post by mikecb »

pionar wrote: post #78
gizmo686 wrote: post #37

Earlier quoted context omitted.

I am not a lawyer. My understanding of this type of clause is not that it makes New York the arbitrator, but rather clarifies for whoever does arbitrate that New York laws should be used. This seems important when working across national (or state) boundries do prevent ambiguity as to what set of laws is being used. I suspect that it is simmilar to copying the relevent laws into a contract and signing that, which is…

>My understanding of this type of clause is not that it makes New York the arbitrator, but rather clarifies for whoever does arbitrate that New York laws should be used. I agree, but it would make sense, then that since the New York legal system is the final interpreter of New York law, then that would be where lawsuits would go.

Not necessarily. It just means that whatever court does hear the case will apply New York law to it, because those are the rules the contracting parties have agreed to use, whether that court be in New York, California, or Scotland.

Having the case actually heard in NY simplifies the application of NY law, but it's probably more for convenience: the parties know that if they have to litigate, they don't need to find new attorney's at some random location.

Re: S.&P. Says Argentina Has Defaulted

#98

Post by thenmar »

simonebrunozzi wrote: post #82

I'm very sorry for Argentinians - I've been there last year, visiting relatives (I'm from Italy, and my grand aunt moved to Argentina in the 50s - she was a bit over 20 - to escape an arranged marriage in Italy, and came back only in the 80s). Argentina is a beautiful country, with problems that are very similar to the ones that we have in Italy - but different scenarios, and different economies. I see this as an opp…

How would that work though? Would the government hand out smart phones to everyone, and offer classes on how to prevent accidentally deleting your life savings?

Re: S.&P. Says Argentina Has Defaulted

#99

Post by pessimizer »

davidw wrote: post #93
blowski wrote: post #80

Earlier quoted context omitted.

I can see both sides here. What surprised me is not that a judge has decided, but that a US judge has decided. It looks like an American judge decided in an American corporation's favour, and against a poorer country, to hell with the damage it will do the world's economy. On the other hand, if the US doesn't uphold the law, then the world economy would be damaged because lending would become more unpredictable. As i…

A portion of the bondholders who had renegotiated their debts are from the US too, and are now wondering what's going to happen.

I'm wondering along with them. Is there any question that this will nullify their agreements and force Argentina to pay them in full also, or were the restructuring agreements written well enough to prevent that?

I have no idea - I wish I knew more about the details.

edit: it's conceivable that Argentina could blink and pay the vultures off, but if they're then liable for all of the debt (which they can't pay) that means that this is going to be a full default, and nobody's getting a dime, right?

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