Tuesday, May 21, 2024

Argentina’s Debt Settlement Ends 15-Year Battle

The Argentinian Navy’s training ship, the Libertad, in port in Ghana in 2012.

The announcement of a $4.65 billion agreement between the Argentine government and four “holdout” hedge funds promises to end a 15-year battle that started when the government defaulted on $100 billion in debt in 2001.

The hedge funds refused to accept a steep discount in two restructurings over the years, while others took 30 cents on the dollar. The agreement announced on Monday gives the four holdouts — Paul Singer’s NML Capital, Mark Brodsky’s Aurelius Capital Management, Davidson Kempner Capital Management and Bracebridge Capital — 75 percent of their claims. Two other hedge funds struck an earlier agreement for 75 percent of their claims. The deal is subject to approval by Argentina’s Congress.

Here’s a look at some crucial moments of the fight over the years.

Oct. 11, 2012 Mr. Singer’s NML Capital persuaded the government of Ghana to freeze the Argentine Navy’s training ship, the Libertad, in port until Argentina put up millions of dollars. Months later, a United Nations tribunal ordered Ghana to release the ship, and it was allowed to sail home.

Graffiti in Buenos Aires depicting an American judge and “vulture” investors behind bars.

June 15, 2014 The United States Supreme Court refused to hear the Argentine government’s appeal on court orders to pay back the debt to the American hedge funds. It also voted 7-1 that bondholders could force Argentina to reveal where it owned property around the world.

June 15, 2014 Argentina’s president, Cristina Fernández de Kirchner, said she would refuse to pay back $1.5 billion to the “vulture” hedge funds despite a court order. She called it extortion and said paying it could set off $15 billion in cash payments to other bondholders, which would be half Argentina’s central bank’s foreign reserves.

Sept. 29, 2014 Judge Thomas P. Griesa of the Federal District Court in Manhattan ruled that Argentina was in contempt of court, saying it would face repercussions for going against his orders on payments to bondholders.

2014 Graffiti around Argentina’s capital, Buenos Aires, called the hedge funds “vultures” and popularized slogans such as “Homeland or vultures” and “Sovereignty or vulture swindle.” Judge Griesa’s caricature appeared in graffiti depicting vultures behind prison bars.

Nov. 22, 2015 Argentina elected Mauricio Macri as its new president, promising free-market policies in contrast to President Fernandez’s refusal to negotiate with the hedge funds. He has moved quickly to settle with bondholders, including a $1.3 billion deal with Italian investors.

Feb. 19, 2016 Judge Griesa lifted an injunction that barred Argentina from raising new money in bond markets or paying its creditors. The ruling depends on two things: Argentina has to repeal a law that prevents it from paying the holdout hedge funds, and it has to make full payments to bondholders who settle by Monday.

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Author: Red

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