More than ten years have passed since the 2011 default, yet the word "end" has not yet been put to the affair of Argentine bonds, which caused Italian savers to lose a lot of money. Last week the New York Court of Appeals rejected Argentina's appeal against the decision to pay 1,4 billion dollars to Paul Singer's two funds. These two funds (Elliot Management Corp and Aurelius Capital Management LP) are among the few that did not adhere to the debt restructuring offers of 2005 and 2010. The ruling, unfavorable to Kirchner's country, provides for theopening of a third debt restructuring plan through the security swap for creditors still owning a good 7% of the so-called "tango bonds".
The first instance ruling was upheld based on the equal treatment of bondholders. Argentina, on the other hand, argued that if investors were right, the principle of sovereignty of the country would be violated and bonds issued subsequently would also be exposed to default.
The final decision rests with the US Supreme Court. Yesterday Economy Minister Hernan Lorenzino announced that, despite the ruling, the same conditions agreed with those who accepted the restructuring plan will be recognized to American funds. If, as requested by the judges of the Court of Appeal, Argentina has to immediately pay 1,4 billion dollars to American funds, the country will be forced to pay another 43 billion to the creditors who adhered to the first offer (for the principle of parity of treatment).
President Cristina Fernandez has already put one on the table bond swap proposal, which would allow Buenos Aires to lengthen payment times and, above all, avoid new cases in foreign courts. In the wake of this statement, five-year CDS recorded a jump of 350 basis points.
