Three Conditions to Lifting Argentine Defaulted Debt Injunction

Summary: The U.S. Appeals Court may approve lifting the Argentine defaulted debt injunction if Argentina pays some creditors in full and repeals hostile laws.

Federal District Court Judge Thomas Griesa premises injunction lifting upon Argentina's repealing certain domestic laws and making full payments to all settling bondholders by Monday, Feb. 29: Juan Forero @WSJForero, via Twitter Feb. 20, 2016

Lifting the Argentine defaulted debt injunction by Thomas Poole Griesa, Federal District Court Judge in Manhattan, New York, Feb. 19, 2016, allows the Republic’s national government to participate in international money markets.

The ruling no longer bars the Argentine government from paying other creditors and raising new money without first paying the investors that hold Argentina’s defaulted debt. It conditions the lifting of the injunction upon repeal by the Argentine government of domestic laws that preclude payments being made to holders of defaulted debt. The lifting of the injunction also depends upon the Argentine national government making full payments to all bondholders that settle with Argentina by Feb. 29, 2016.

The approval of the United States Court of Appeals for the Second Circuit in New York emerges as the third condition prefatory to lifting the injunction.

Two declarations in the 21st century on defaulting payment schedules for the national debt furnish the chain of events that include the Argentine defaulted debt injunction.

The first of the two declarations, less than 15 years ago, relating to defaulted payment schedules goes back to a presidential announcement Dec. 23, 2001. The total amount of the debt defaulted by the Argentine central government, at $132 billion, holds the record as the largest default in world history. The second biggest default, prior to 2001, is held by the former Soviet Union with a partial default on $188 billion Aug. 17, 1998.

The second declaration of default payments of the Argentine central government debt joins the first declaration 13 years later, with an announcement July 30, 2014.

The Argentine defaulted debt injunction issued Feb. 23, 2012, by Judge Griesa keeps all, no longer some, bondholders hopeful of receiving payment on their investments.

The proposed dropping of the injunction lifts that protected place, in the payment sequence, from investors who are known as holdout bondholders of Argentina’s defaulted debt. The holdouts make up a hedge fund group that is led by NML Capital Limited unit of New York-based billionaire Paul Elliott Singer’s Elliott Management Corporation. The description as holdouts notes the group’s refusal to accept two offers by the Argentine national government to restructure debt bonds for cheaper, more recent versions.

The record-keepers for investors in defaulted sovereign debt observe the first offer as occurring Jan. 14, 2005, and the second offer as occurring April 15, 2010.

Marcos Peña, Chief of the Cabinet of Ministers of the Argentine Nation since Dec. 10, 2015, perceives a general, provincial gubernatorial and legislative understanding regarding repeals. He quantifies the repeals and the settlements preceding dropping the injunction and re-entering markets as "Everything is going in the direction" of growth and stability.

The administration of Mauricio Macri, 53rd President of Argentina through election Nov. 22, 2015, seeks access to international financial institutions and to international money markets.

Legislative action generally takes about a month so Argentine legislators need most of March to repeal laws that keep the Argentine defaulted debt injunction from lifting.

Marcos Peña, Jefe de Gabinete de la Nación Argentina; Tuesday, Feb. 2, 2016, 11:27: Casa Rosada (Argentina Presidency of the Nation), CC BY 2.5 Argentina, via Wikimedia Commons

Acknowledgment

My special thanks to talented artists and photographers/concerned organizations who make their fine images available on the internet.

Image credits:

Federal District Court Judge Thomas Griesa premises injunction lifting upon Argentina's repealing certain domestic laws and making full payments to all settling bondholders by Monday, Feb. 29: Juan Forero @WSJForero, via Twitter Feb. 19, 2016, @ https://twitter.com/WSJForero/status/700867740861476865

Marcos Peña, Jefe de Gabinete de la Nación Argentina; Tuesday, Feb. 2, 2016, 11:27: Casa Rosada (Argentina Presidency of the Nation), CC BY 2.5 Argentina, via Wikimedia Commons @ https://commons.wikimedia.org/wiki/File:Marcos_Peña.jpg

For further information:

Juan Forero @WSJForero. 19 February 2016. "U.S. judge to lift injunction in Argentina debt dispute, key to President Macri's efforts to settle with bondholders." Twitter.
Available @ https://twitter.com/WSJForero/status/700867740861476865

Marriner, Derdriu. 11 December 2015. "Argentine President Mauricio Macri Wins Presidential Office and Palace." Earth and Space News. Friday.
Available @ https://earth-and-space-news.blogspot.com/2015/12/argentine-president-mauricio-macri-wins.html

Van Voris, Bob; and Katia Porzecanski. 20 February 2016. “Argentina Debt Injunction to Be Lifted in Blow to Hedge Funds.” Bloomberg > News. Feb. 20, 2016 5:33 p.m. EST. Updated Feb. 20, 2016 10:25 a.m. EST.
Available @ http://www.bloomberg.com/news/articles/2016-02-19/argentina-bonds-judge-says-he-will-lift-injunctions-on-debt-iku9ykz3