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S.&P. Says Argentina Has Defaulted

dealbook.nytimes.com

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Re: S.&P. Says Argentina Has Defaulted

#161

Post by PeterisP »

lmm wrote: post #115
cpwright wrote: post #104

Earlier quoted context omitted.

You might say that it is a "technicality", but it is the contract the government of Argentina agreed to. The only thing you have with a financial arrangement of this magnitude is the contract. It is perfectly reasonable for the creditors to do all they can to get paid. It isn't a failure of their risk management, because they probably figured this was risky all along. If Argentina didn't want the bonds to be subject…

I think even with a financial arrangement of this magnitude there's a place for considering what's fair and equitable. Maybe there were mistakes in the contracts, but the overwhelming majority of bondholders are willing to be reasonable - it's the few holdouts who are wrecking it for everyone.

At this magnitude there aren't "mistakes in the contracts" - every provision, by including or excluding it, meaningfully affects the price of that bond.

Just like in insurance contracts - if you buy a policy for $123 that covers A, B and C but excludes D and E, then you don't get to argue if C should be fairly excluded or D should be fairly included - if the contract would've been different, then the price would've been different, and you got the price that matched the exact terms as written, not some other terms.

Bondholders may reasonably have conflicting interests - for example, if some bondholders have significant other investments in that country, then they have motivations to settle cheaply that would conflict with other bondholders, and it's not fair if those other bondholders get less of their debt back.

If you sell a bond whose terms that includes specific protection against that (the lack of provision that minorities would have to agree if majority restructures), then it's not reasonable to withdraw that protection afterward; a bond with slightly different terms is a completely different bond, even if the amounts match.

In serious contracts, expecting "take-backsies" isn't reasonable; either term X is in the contract or it isn't - that's what the exact agreement was, and not the other way.

Re: S.&P. Says Argentina Has Defaulted

#162

Post by gyardley »

pibefision wrote: post #36
eudox wrote: post #2

The worst thing about living in Uruguay is being right next to Them. Now this happens, and we're going to get the fallout.

Well, Chile is being in the left, and does not have any problem. Your argument is not very strong. In true, Uruguay has it owns problems.

Chile is separated from Argentina by 'the Great Wall of Chile' - the Andes mountains - and unlike Uruguay, has an economy dominated by mineral resource extraction to China and the United States, not agricultural exports to its immediate neighbors.

It's not the same situation at all; context matters.

Re: S.&P. Says Argentina Has Defaulted

#163

Post by brohee »

dieg0 wrote: post #155

Everybody involved in the 2001 default knew this was going to happen. And it can even be said that Argentina didn’t plan to pay what they promised from the beginning, although I cannot attest to it. One detail I want to add to the discussion is that in the past few years the global panorama changed for Argentina, they sit on top of the second largest shale gas reserve in the world, and plan to extract it. They need m…

Colombia is in what could be called a civil war without exaggerating too much, it's not like a FARC like organization controls large swath of Argentina. Why do you call Colombia more stable?

Re: S.&P. Says Argentina Has Defaulted

#164

Post by vivab0rg »

dysoco wrote: post #105
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…

Correct me if I'm wrong, but Bitcoin requires you to go arround with a cellphone and internet 24/7 in order to make payments. That might be a thing in Buenos Aires but definitively not in the rest of the country. Bitcoin as national currency might work 10 years from now in Sweden or Germany, but definitively not here.

Um. Ever heard of paper-wallets[0]?

[0]: https://en.bitcoin.it/wiki/Paper_wallet

Re: S.&P. Says Argentina Has Defaulted

#165

Post by dieg0 »

brohee wrote: post #163
dieg0 wrote: post #155

Everybody involved in the 2001 default knew this was going to happen. And it can even be said that Argentina didn’t plan to pay what they promised from the beginning, although I cannot attest to it. One detail I want to add to the discussion is that in the past few years the global panorama changed for Argentina, they sit on top of the second largest shale gas reserve in the world, and plan to extract it. They need m…

Colombia is in what could be called a civil war without exaggerating too much, it's not like a FARC like organization controls large swath of Argentina. Why do you call Colombia more stable?

You are right, things have changed in Colombia, but might be too early to say it is more stable

Re: S.&P. Says Argentina Has Defaulted

#166

Post by sseveran »

pessimizer wrote: post #107
sseveran wrote: post #103

Earlier quoted context omitted.

They can not like it all they want, the judge enforced the law. Since there was no clause to force restructuring in the original bonds and there was a clause to prevent any bond holders from getting a better deal then the restructured bonds, Argentina was left with no option but to pay the original debt. The issue is entirely one of their making.

The judge didn't enforce the law, the judge interpreted the law, and could have just as easily interpreted it in a way that you didn't agree with.

It turns out that is what judges do. When there is a disagreement about the terms of a contract a judge or jury has to decide what to do.

Re: S.&P. Says Argentina Has Defaulted

#167

Post by Shorel »

dieg0 wrote: post #155

Everybody involved in the 2001 default knew this was going to happen. And it can even be said that Argentina didn’t plan to pay what they promised from the beginning, although I cannot attest to it. One detail I want to add to the discussion is that in the past few years the global panorama changed for Argentina, they sit on top of the second largest shale gas reserve in the world, and plan to extract it. They need m…

Chile is more stable, Colombia has better weather and Perú has tastier food.

Re: S.&P. Says Argentina Has Defaulted

#168

Post by rabble »

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".

I think it's a matter of definitions. Demographically the countries are actually more similar, there is just differences in how people identify. The biggest difference between the two countries and cultures is Uruguayans are secular both in personal culture and with regard to the state. Where as Argentines are Catholic. There's also a big difference in political culture, structures of political parties and faith in institutions. Uruguay has much less corruption.

Re: S.&P. Says Argentina Has Defaulted

#169

Post by rabble »

_ouxp wrote: post #51
djKianoosh wrote: post #23

Earlier quoted context omitted.

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.

It's so friendly that Uruguayans and Argentines don't identify the other as foreign. Uruguayans didn't want to be their own country when their started their independence war, it was an attempt to not be part of Spain or Brazil and to be joined with what would become Argentina. It was the British who decided Uruguay would be an independent country. Since then in the last 200 years, they've developed somewhat distinct institutions and cultures. It's similar to the relationship between the US and Canada.

Re: S.&P. Says Argentina Has Defaulted

#170

Post by encoderer »

PeterisP wrote: post #123
encoderer wrote: post #109

Earlier quoted context omitted.

In the story they said Argentina has transferred $500MM to pay bond holders, but the bank refuses to transfer it because the court ruled they could not selectively pay and any cooperating banks would be in contempt. Is there another layer to the story I'm missing?

That's the exact thing - they have the money to pay, but they have to give a proportion of that money to the holdout bondholders (the "not selective" part), and they refused to do that, despite all the negotiations. Courts didn't rule that they can't pay, courts ruled that they can't ignore the other bondholders when paying. [edit] A car analogy - if a court says you can't drive until you pay your parking fines, then…

that makes sense
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