Pension Pulse: Argentina's Last Tango With Bondholders?
Argentina gets second reprieve from U.S. court on debt payment | Reuters
Guest post: Time to ratchet up the pressure on Argentina | beyondbrics
My guess sooner or later those bondholders that held out will get something, because giving them nothing is not possible.
Long story short after Argentina defaulted and 90%+ bondholders agreed to a haircut and an exchange for bonds and other recompense at a fraction of prior value some bondholders didn't agree and pulled out "holdouts". These "holdouts" led by hedge funds and others are arguing that they should be treated like everyone else (after Argentina said they will never ever ever pay them). Them being treated like everyone else was under the laws of New York, in the USA since the bonds were issued under USA jurisdiction.
Why this is interesting and will apply to Europe. Think about Greece, Italy, and others issuing bonds in jurisdictions like London, New York, Paris, Singapore, Hong Kong, or Berlin... etc...
Imagine the predicament of a defaulted Greece having bonds issued in London under UK law with UK pulling out of Europe, denominated in Euroes, once Greece leaves the Eurozone. (if any of this happens).
Just imagine the possibilities it could theoretically say that 1 New Drachma is officially = to 5,000,000 Euro (unofficially it can be anything else) the creditors don't have to take it... But just imagine how the retaliation could happen. In Argentina's case there were loans that are pulled to get the repayment going for development and other aspects. The other aspect is if the funds or Gold held by Greek state is in London, or what if it is in Greece but pledged as security but then not honored and they give bondholders the finger? Lots of interesting permutations. What about market access if they leave will Europe retaliate and Greece simply confiscate foreign holders assets as a fine for not taking the 1 New Drachma offer for 5 mill Euro? Just think if you do not take the offer you are fined 500 New Drachma in foreign currency if you are a foreign designated resident? lots of interesting things.
Argentina gets second reprieve from U.S. court on debt payment | Reuters
Guest post: Time to ratchet up the pressure on Argentina | beyondbrics
My guess sooner or later those bondholders that held out will get something, because giving them nothing is not possible.
Long story short after Argentina defaulted and 90%+ bondholders agreed to a haircut and an exchange for bonds and other recompense at a fraction of prior value some bondholders didn't agree and pulled out "holdouts". These "holdouts" led by hedge funds and others are arguing that they should be treated like everyone else (after Argentina said they will never ever ever pay them). Them being treated like everyone else was under the laws of New York, in the USA since the bonds were issued under USA jurisdiction.
Why this is interesting and will apply to Europe. Think about Greece, Italy, and others issuing bonds in jurisdictions like London, New York, Paris, Singapore, Hong Kong, or Berlin... etc...
Imagine the predicament of a defaulted Greece having bonds issued in London under UK law with UK pulling out of Europe, denominated in Euroes, once Greece leaves the Eurozone. (if any of this happens).
Just imagine the possibilities it could theoretically say that 1 New Drachma is officially = to 5,000,000 Euro (unofficially it can be anything else) the creditors don't have to take it... But just imagine how the retaliation could happen. In Argentina's case there were loans that are pulled to get the repayment going for development and other aspects. The other aspect is if the funds or Gold held by Greek state is in London, or what if it is in Greece but pledged as security but then not honored and they give bondholders the finger? Lots of interesting permutations. What about market access if they leave will Europe retaliate and Greece simply confiscate foreign holders assets as a fine for not taking the 1 New Drachma offer for 5 mill Euro? Just think if you do not take the offer you are fined 500 New Drachma in foreign currency if you are a foreign designated resident? lots of interesting things.
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