Comments on: Argentina’s stunning pari passu loss

By: Danielmontero

Danielmontero — Sat, 10 Nov 2012 00:20:07 +0000

We also have to think that JUSTICE have to be above the guvernments
and not the oposite like in the third world

By: Danielmontero

Danielmontero — Sat, 10 Nov 2012 00:14:01 +0000

Dear Felix we speak some years ago..
So the base-case scenario at this point has to be that Elliott will ultimately win. I can hardly believe I’m writing these words: I’ve been writing about holdouts, or vultures, or whatever you want to call them

I want to call them JUSTICE FUNDS

I am Ecuador houldout and I pay 100% of the price for them

By: great1

great1 — Tue, 06 Nov 2012 18:56:51 +0000

Even though land is now, “Discounted”. Unless you are a Argentina citizen, you can no longer buy land in Argentina. We had a vinyard 4 years ago, and sold it for a profit. We could see the writting on the walls then. Whole fields of produce rotting in the fields, crooked officials, that weren’t afraid to steal from the Americans, or Government officials who weren’t afraid to,” take donations for a piece of worthless paper”. Sounds like the officials saw the stealing at the top of the government, and worked it’s way down. Hmm
sounds a lot like our Governmentat home.

By: willi1

willi1 — Mon, 29 Oct 2012 13:39:44 +0000

All in all: the argentine government is a gang of financial crooks who hide their money in basel/switzerland to avoid that it could be seized by holdout bondholders.

now the world defends argentine in hiding their money. the reasons: if the args must pay out their money for their debts, also other countries had to do that in case of a default and would have problems to manage the default.

what the hell is the money for other than pay it out for their debts?? any businesman with debts has to pay out his money to his debtors until his debts are paid. in case of failing to do so he has to be aware of the jail. why not argentine? because their is ruling an offended, self-important, egoistic, self-righteous president ck? that is the main reason and problem in this tricky business with argentine.

NMl did right. hopefully Ghana keeps strong with the boat and the us-supreme court rejects the revision.

By: s2c

s2c — Sun, 28 Oct 2012 18:00:20 +0000

I think you are making heavy weather over nothing. From the beginning you misunderstood this case. The pari passu clause in the FAA is in fact unique in that there were two covenants in play: a traditional pari passu clause and a separate and distinct “equal protection” clause. Not all pari passu clauses have the second equal payment clause. The former prevents subordination while the later addresses discrimination among creditors. The reading the Second Circuit gave is unique to pari passu clauses that have this distinct covenant. Moreover, Argentina doesn’t need to use the bank of new york to circumvent the ruling. Bondholders can open up Argentina accounts for receipt of coupon payments so no big deal and keep in mind between the en banc hearing, proceedings before Greisa, the ability to appeal Griesa’s ruling and ultimate appeal to the Supreme Court, we are years away from any final resolution. Until then, business as usual.

By: Frwip

Frwip — Sun, 28 Oct 2012 04:01:42 +0000

Excellent reporting, FS!

This judgement is absolutely disastrous. If US courts go in this direction, God helps us all. The ramifications are insane and the kind that make wars.

But, now, assuming that tur^H^H^H judgement holds, the non-holdout bondholders are severely impaired. I’m wondering what kind of recourse they have against Elliott.

By: y2kurtus

y2kurtus — Sat, 27 Oct 2012 21:30:46 +0000

Felix thanks for the great coverage on this. Hard to find anywhere else!

qusma point about issuing foreign law bonds seems spot on to me. If you want to issue bonds in someone elses market (and someone elses legal system) then you obviously lose some of your sovereign rights.

By: MrRFox

MrRFox — Sat, 27 Oct 2012 18:38:42 +0000

Credit where it is due – beautifully stated, FS.

By: Twinkbait

Twinkbait — Sat, 27 Oct 2012 18:22:49 +0000

Felix!

It’s Saturday; relax. Go get a coffee with a shot of your favorite juice/liquor and just enjoy yourself today!

By: CharlieLefaux

CharlieLefaux — Sat, 27 Oct 2012 17:43:48 +0000

I’m not a lawyer but I would say that the district court’s injunctions do violate § 1609 insofar as the value of Argentina’s property is affected in the sense it is immediately discounted when transferred. If Argentina is to make a payment of $1.00 to a New Bondholder, the value the New Bondholder receives is no longer $1.00 as some of it has to be remitted to the Old Bondholder.
This affects the value of Argentina’s property as it is now discounted; it limits the uses to which Argentina may put its fiscal reserves. It does indeed transfer dominion or control over sovereign property to the court.

By: k9quaint

k9quaint — Sat, 27 Oct 2012 16:50:32 +0000

If Argentina does not want to be subject to US law, it should not issue and service it’s bonds via US Banks.

@FifthDecade I fail to understand why “vulture” funds are immoral. Acquiring something that nobody else wants in the hopes that some value can be recovered is called recycling when applied to any other aspect of the economy.

By: qusma

qusma — Sat, 27 Oct 2012 10:02:12 +0000

The whole point of sovereigns issuing foreign law bonds is to make it harder for them to default; in exchange they get to borrow at lower rates. If they also have the ability to default and impose whatever terms they like on their creditors, it seems like they would have their cake and eat it too.

Greece (rightly) didn’t even contest the issue when foreign law bond owners held out during the PSI, and kept paying everything on time.

The issue is completely irrelevant to the U.S. itself because it can always amend its laws to allow it to do whatever it wants with its debt.

By: FifthDecade

FifthDecade — Sat, 27 Oct 2012 09:05:15 +0000

When the law is a ass, it needs to be changed. Feeding it the best carrots won’t help; vulture funds are immoral, and while they seem to agree with the letter of the law I would imagine this ruling will have long term and world-wide political implications, pushing more Latin American countries into the Chavez-Castro orbit, and financially towards Communist China, rather than to the US or the West. Strategically, in my view for the interests of us in the West, it’s a bad outcome – especially since we are the ones that constitute the largest part of the debtor Nations. One day, such precedents will be applied to us…