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Argentina should never have handled the bonds under NY law and without control of the bondholder's list. That mistake is costing them dearly. The only reason t

Argentina should never have handled the bonds under NY law and without control of the bondholder's list. That mistake is costing them dearly. The only reason they can't pay everyone but the holdouts [e.g. selective default] is because of the fact they handled them under NY law after the 2001 default. :/

preinheimer 12y ago
With their economic history, they would have had a much harder time issuing the bonds elsewhere.
- opendais 12y ago
  Yes but at this point they are still being screwed over because of a decision made in 2001 and so they are getting hit multiple times with the "untrustworthy borrower bat" instead of just once. For a single incident.
PeterisP 12y ago
If they hadn't ceded the legal control to NY law, then they either wouldn't have gotten the money they wanted, or at the very least had a much higher interest for it. That's the whole point - if you're a trustworthy borrower, then you can get money on decent terms; but if you're like Argentina then every lender needs all the protection they can get, to try to prevent cases like this one.
- opendais 12y ago
  The point is, they are getting hit multiple times with the "untrustworthy borrower bat" for a single incident in 2001 and are now being forced to screw all of their borrowers and not just the ones who refused to play ball in 2001. Because NY law. That is like saying "Oh, you can pay none of your debts until you pay the ones you defaulted on already in 2001." Nope.jpg. That is f'ed up. They defaulted in 2001. You don't get to come back and say "Oh, but you have to pay us anyway or we will not let you pay the debts since then either." EDIT: I'm amused by the downvotes given that is how bankruptcy law works most places. You default one time. The zombie borrowers don't get to come back later and demand money later, enforced by the courts.
  - PeterisP 12y ago
    The reason that they can demand money is that those bonds have a requirement that Argentina will pay all bondholders equally - even if they pay x% of it, then they have to pay every bondholder x%, instead of paying some bondholders more and some less or nothing. Now Argentina is paying money to some of those old bondholders according to the restructured debt that Argentina itself agreed to. However, all other bondholders - including some that Argentina dislikes and doesn't want to pay - have a valid claim on that money, according to that initial rule. That's it. Argentina can pay noone (as per a default). Argentina can pay all the bondholders equally. But it's not allowed to choose which bonds to pay and which not to pay.
    - opendais 12y ago
      > However, all other bondholders - including some that Argentina dislikes and doesn't want to pay - have a valid claim on that money, according to that initial rule. That's it. That isn't it. Those "bondholders Argetina dislikes" are asking for more money than the rest and are demanding the full value for bonds that all the other bondholders agreed to take a haircut on in 2001. You don't get to go back and demand full value on debt that was restructured for everyone else. That is like if I declared bankruptcy and one of my credit card companies held out for full payment on the debt when all the others had already signed off on X% of the debt. That credit card company wouldn't be able to do it but these bondholders can because they found the right judge.
      - PeterisP 12y ago
        Argentina issued the bonds on explicit terms that it will be okay to hold out on a haircut - Argentina agreed that even if 93% agree on restructuring, then it's not binding to others and they can demand full value. Argentina issued the bonds on explicit terms that it will pay everyone equally - even if they agree or refuse some future deal. Argentina dislikes them from not agreeing to it, but that's it - only a dislike that doesn't give any rights to pay them differently than others; they didn't have to agree to the haircut, so it's within their rights to demand to be paid whenever the others get paid. For your CC example - yes, it would likely be different in personal bankruptcy, but that's not relevant because personal bankruptcy intentionally gives much more protection than sovereign bonds, the rules are quite different there. And sovereign defaults don't wipe you as clean like a personal bankruptcy does in many western countries - and there are jurisdictions where you don't get personal bankruptcy, and you keep the debts until you die. And in some places, even after that - the debt transfers to the heirs.
wslh 12y ago
Debtors couldn't rely in the completely corrupt Argentinian judicial system.
- opendais 12y ago
  And now none of the bondholders can be paid because a hedge fund shopped it around to the right judge. That is so much better.
  - PeterisP 12y ago
    What do you mean, "shopped it around to the right judge"? Argentina agreed that any disputes would be according to the NY/USA law, and the matter went to those exact courts, appealed up to USA Supreme Court. To what judge should the dispute have gone, in your opinion? Is there some important part of this dispute that I'm missing here?
    - opendais 12y ago
      Don't worry about it, the majority doesn't agree with me and arguing about it further is pointless.

preinheimer 12y ago

With their economic history, they would have had a much harder time issuing the bonds elsewhere.

opendais 12y ago
Yes but at this point they are still being screwed over because of a decision made in 2001 and so they are getting hit multiple times with the "untrustworthy borrower bat" instead of just once. For a single incident.

PeterisP 12y ago

If they hadn't ceded the legal control to NY law, then they either wouldn't have gotten the money they wanted, or at the very least had a much higher interest for it. That's the whole point - if you're a trustworthy borrower, then you can get money on decent terms; but if you're like Argentina then every lender needs all the protection they can get, to try to prevent cases like this one.

opendais 12y ago
The point is, they are getting hit multiple times with the "untrustworthy borrower bat" for a single incident in 2001 and are now being forced to screw all of their borrowers and not just the ones who refused to play ball in 2001. Because NY law. That is like saying "Oh, you can pay none of your debts until you pay the ones you defaulted on already in 2001." Nope.jpg. That is f'ed up. They defaulted in 2001. You don't get to come back and say "Oh, but you have to pay us anyway or we will not let you pay the debts since then either." EDIT: I'm amused by the downvotes given that is how bankruptcy law works most places. You default one time. The zombie borrowers don't get to come back later and demand money later, enforced by the courts.
- PeterisP 12y ago
  The reason that they can demand money is that those bonds have a requirement that Argentina will pay all bondholders equally - even if they pay x% of it, then they have to pay every bondholder x%, instead of paying some bondholders more and some less or nothing. Now Argentina is paying money to some of those old bondholders according to the restructured debt that Argentina itself agreed to. However, all other bondholders - including some that Argentina dislikes and doesn't want to pay - have a valid claim on that money, according to that initial rule. That's it. Argentina can pay noone (as per a default). Argentina can pay all the bondholders equally. But it's not allowed to choose which bonds to pay and which not to pay.
  - opendais 12y ago
    > However, all other bondholders - including some that Argentina dislikes and doesn't want to pay - have a valid claim on that money, according to that initial rule. That's it. That isn't it. Those "bondholders Argetina dislikes" are asking for more money than the rest and are demanding the full value for bonds that all the other bondholders agreed to take a haircut on in 2001. You don't get to go back and demand full value on debt that was restructured for everyone else. That is like if I declared bankruptcy and one of my credit card companies held out for full payment on the debt when all the others had already signed off on X% of the debt. That credit card company wouldn't be able to do it but these bondholders can because they found the right judge.
    - PeterisP 12y ago
      Argentina issued the bonds on explicit terms that it will be okay to hold out on a haircut - Argentina agreed that even if 93% agree on restructuring, then it's not binding to others and they can demand full value. Argentina issued the bonds on explicit terms that it will pay everyone equally - even if they agree or refuse some future deal. Argentina dislikes them from not agreeing to it, but that's it - only a dislike that doesn't give any rights to pay them differently than others; they didn't have to agree to the haircut, so it's within their rights to demand to be paid whenever the others get paid. For your CC example - yes, it would likely be different in personal bankruptcy, but that's not relevant because personal bankruptcy intentionally gives much more protection than sovereign bonds, the rules are quite different there. And sovereign defaults don't wipe you as clean like a personal bankruptcy does in many western countries - and there are jurisdictions where you don't get personal bankruptcy, and you keep the debts until you die. And in some places, even after that - the debt transfers to the heirs.

wslh 12y ago

Debtors couldn't rely in the completely corrupt Argentinian judicial system.

opendais 12y ago
And now none of the bondholders can be paid because a hedge fund shopped it around to the right judge. That is so much better.
- PeterisP 12y ago
  What do you mean, "shopped it around to the right judge"? Argentina agreed that any disputes would be according to the NY/USA law, and the matter went to those exact courts, appealed up to USA Supreme Court. To what judge should the dispute have gone, in your opinion? Is there some important part of this dispute that I'm missing here?
  - opendais 12y ago
    Don't worry about it, the majority doesn't agree with me and arguing about it further is pointless.