Il president of Argentina Cristina Fernandez Kirchner he is furious. US Judge Thomas Griesa ratified the obliging order Buenos Aires to deposit, by December 15th, US$1,33 billion in escrow to ensure the payment of bonds to creditors who did not join the debt restructuring in 2001.
La Kirchner's defeat was clear-cut: it is in fact 100% of what the bondholders were asking for, with the Nml Capital fund in the lead. But "the vulture funds", as the President calls them, cannot claim victory yet. Economy Minister Hernan Lorenziono confirmed that on Monday it will appeal to the Court of Appeal and, ultimately, to the Supreme Court.
Griesa, however, is not intimidated: "The less time Argentina has to shirk its commitments, the less likely it is to do so," he said to explain the choice of deadline. Furthermore, the judge ruled that if the Casa Rosada opposes the payment of the capital into the guarantee deposit, the financial intermediaries (Bank Mellon of New York in primis) would also be held guilty as accomplices of the Bonara government.
For Argentina it is one race against time: he should be able to obtain the reconsideration of the Court of Appeal by 15 December in order not to involve the intermediaries and to obtain the establishment of the pari passu clause, so that he is not obliged to pay all that the creditors claim in a single tranche.
Lhypothesis of default lurks precisely in the fact that if it were to repay the funds at the same time it could fall into technical default. It also has to pay off $3,14 billion in bond repayments and interest due on December 15 by the end of the year.
La fear of the markets it's obvious. On the Buenos Aires Stock Exchange there was a wave of sovereign bond sales due to fears of a new default: the public debt securities they lost up to 13,58%. But also the trend of cds on Argentine 1-year bonds speak for themselves: in recent days the yield has jumped by more than 224 basis points to a peak of 6.506.
The Casa Rosada must therefore consider whether it is worth depositing these 1,33 billion dollars while the dispute continues. The country's growth slowed down, theinflation keep galloping, lo social discontent rises and the largest companies need financing at the lowest possible rates. If he continues with this attitude, the cost of money will increase even more and the hypothesis of a new default will become increasingly realistic.
On December 23, 2001, Argentina declared a $95 billion default. Buenos Aires offered defaulting bondholders new bonds at a 70% discount: 33 cents to the dollar. About 92% of savers accepted it.
