Courtesy of Mish.
It’s increasingly likely that Argentina will come up with a way to get around a US supreme court ruling on bond payouts.
Here is the background …
Argentina defaulted on bonds following a debt crisis in 2001-2002. 92% of the investors agreed to haircuts, but an alleged “vulture fund” picked up an 8% share at rock bottom prices and refused to negotiate.
In June, the US Supreme Court ruled that Argentina Cannot Selectively Default on the small group of hold-outs.
Today El Pais reports Argentina Offers to Pay Creditors in France.
Comments Regarding “Vultures”
I have nothing against “vultures” and do not even like the term. In general, vultures serve a purpose, as do those who short stocks.
That said, I find the US Court ruling that Argentina Debt Swap Proposal is Illegal rather odious.
Fortunately the judge stopped short of making a “contempt of court ruling”.
Here’s the deal in a nutshell. Those investing in Argentinean debt should have known the possible outcome. Argentina has defaulted before. It did so again, and alleged “vulture funds” made a bet they would be paid in full even if no one else would be.
But if holdouts were guaranteed to be paid in full, everyone would be a holdout.
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