Default Imminent: Argentina Must Pay $539 Million Today

Argentina Must Pay $539 Million Today – Default Imminent (ZeroHedge, June 30, 2014):

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)

20140630_MERVAL

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.”

Buit 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.

 

2 thoughts on “Default Imminent: Argentina Must Pay $539 Million Today

  1. Hugo Chavez had many bad things said about him, but he managed to get things done, he understood his culture. Even more than his culture, he recognized the US had a boot on everyone’s neck, and he found a way to quietly fight back. I think when the day and time of writing his biography comes around, I hope his biographer is one who understands the power of economics. The most powerful thing ever done to the US was engineered by this little third world dictator, Hugo Chavez.
    He saw what happened to the nations that spoke against the US keeping reserve currency status after going off the gold standard. Iraq was one example…….the nation was vanquished for a million lies and not one word of truth.
    He introduced the first electronic currency into his tiny association The South American Trade Alliance in Spring of 2010. For the first time, member nations could trade with each other, using their own currencies, leaving conversion to any other currency obsolete. The Sucre simply translated the value of each member’s currency at the time of transaction, making the need for any world reserve currency a need of the past.
    Technology is a powerful tool. Russia and China watched them carefully, and in November of 2010, they set up a similar agreement with each other, using their own currencies, leaving the dollar out. China then went on to recruit Turkey, Iran (who was already accepting most currencies) many of the emerging African, Southern and Central American nations. They quietly built this amazing coalition, and just about a month ago, finally went public about it.
    Since I had been monitoring this since November of 2010, I didn’t at first understand why they were now making a big public statement of a de-dollaring world………But, they also have better than half the world working with them, against the US dollar…….thus the wait.
    Now, it is a done deal, and the strong man of the hour is Putin. China blew their chances of becoming a #1 nation by ignoring the outrages against their environment by the greedy corporations. Now, the corporations are leaving, nobody wants to work in a city dump, and China is last man out.
    China is tied in with it’s alliances, not its wealth. It is the world’s largest cesspool, and the bright future they seemed to enjoy a decade ago appears to have vanished.
    The only strong one out there is Putin, and only the fool US government is stupid enough to take them on.
    I hope something is worked out for Argentina, but the greedy guts are in control, and they seem to lack for sane leadership since Chavez’s death.

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