With 1 Week Left Until Argentina's 'D'efault-Day, Judge Blasts "Judgments Are Judgments"

Tyler Durden's picture

Day after day, headlines from Argentina implore Judge Griesa to do the "fair, responsible" thing and lift his judgment that holdouts get paid before current bondholders receive their payments... and day after day Argentina's demands are met with silence or denials. Today, though, with 1 week left until Argentina must put up or shut up, Judge Griesa has come out swinging...

  • *U.S. JUDGE SAYS OF ARGENTINA RULINGS: 'JUDGMENTS ARE JUDGMENTS'
  • *ARGENTINA'S 'INCENDIARY` RHETORIC `UNFORTUNATE,' JUDGE SAYS
  • *U.S. JUDGE URGES 'SENSIBLE STEPS' TO AVOID ARGENTINA DEFAULT

While CDS spreads have surged once again, bonds trade with default probabilities around only 50% which, according to Jefferies "are expensive on underestimating the risk of default."

 

 

As Bloomberg reports,

U.S. District Judge Thomas Griesa declined to rule immediately on calls by holders of defaulted Argentina bonds to bar payment on some dollar- and yen-denominated debt in a hearing in Manhattan federal court.

 

Argentina had asked the judge to delay rulings that bar the country from making payments on its restructured debt before paying holders of defaulted bonds as it faces a possible second default this month.

 

The South American nation renewed its request for a delay so it can negotiate without risking liability for what it argues could be billions of dollars in new claims by holders of defaulted and restructured bonds. That request has yet to be addressed.

 

Today, Griesa began the proceedings by hearing arguments about whether his orders bar payments to holders of U.S. dollar-denominated exchange bonds issued under Argentine law and payable in that country, without a corresponding payment to holders of the defaulted bonds.

Judge Griesa is not happy...

  • *U.S. JUDGE URGES `SENSIBLE STEPS' TO AVOID ARGENTINA DEFAULT
  • *U.S. JUDGE REAFFFIRMS RIGHTS OF DEFAULTED ARGENTINA BONDHOLDERS
  • *U.S. JUDGE SAYS OF ARGENTINA RULINGS: `JUDGMENTS ARE JUDGMENTS'
  • *GRIESA CITES ARGENTINA REFUSAL TO PAY NUMEROUS COURT JUDGMENTS
  • *ARGENTINA'S `INCENDIARY` RHETORIC `UNFORTUNATE,' JUDGE SAYS
  • *ARGENTINA DEFAULT `WOULD BE MOST UNFORTUNATE' U.S. JUGDE SAYS
  • *ARGENTINA DEFAULT JUDGE SAYS WE HAVE ARRIVED AT 'CRUCIAL TIME'
  • *U.S. JUDGE CITES ARGENTINA'S `OBLIGATIONS' TO BONDHOLDERS
  • *ARGENTINA BOND PARTIES MUST MEET WITH MEDIATOR `CONTINUOUSLY'

Jefferies warns bonds are underestimating the risk...

Argentine bonds sold under New York law due 2033 “are expensive on underestimating the risk of default,” which is 50% and increasing, Siobhan Morden, the head of Latin America strategy at Jefferies Group, wrote in a report today

*  *  *
Argentina will enter into technical default on its restructured bonds on July 30 unless it reaches an agreement with the holdouts.

The clock is ticking... and Argentina is furious...

  • *ARGENTINA LAWYER SAYS COURT ORDERS RISK 'IMMINENT' DEFAULT
  • *ARGENTINA LAWYER SAYS JULY ACCORD FACES `HUGE CONSTRAINTS'

Three weeks after President Cristina Fernandez de Kirchner sent $539 million to pay bondholders, the money remains in limbo as a U.S. court considers what to do with the funds.

 

Fernandez said on July 16 the country can’t default because it sent the funds to the banks, and now it’s the responsibility of bondholders to demand payment from the judge and intermediary banks.

 

“Only countries that stop paying their debt fall into default,” Fernandez said at a conference in Brazil. “Argentina will keep paying its debt and meeting its obligations.”

We shall see...

We leave it to Judge Griesa to conclude...

"IN MY VIEW, EVERY SINGLE PROBLEM YOU'VE [ARGENTINA] DESCRIBED IS SUSCEPTIBLE TO BE HANDLED IN A SETTLEMENT...

 

IF WE DON'T, THERE WILL BE A DEFAULT, AND THAT IS THE WORST THING."

Bond prices are falling after the judge's latest ruling...

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DoChenRollingBearing's picture

"No llores por mi, Argentina..."

ShorTed's picture

Kyle Bass getting nervous or doubling down?

john39's picture

>judgments are judgments

what a tool.  what I see is that most judgments these days are uncollectable garbage, not worth the paper they are written on.

Almost Solvent's picture

Anyone who has worked collections or BK will know this little gem:

Liability does NOT equal Collectability
OR – Owe the bank $1M and it’s their problem, not yours.

Vampyroteuthis infernalis's picture

Dear bankers, you loaned money to an insolvent South American country a long time ago. Tough luck idiots!!!

Renewable Life's picture

This global ponzi is sooooooo over leveraged, I could see Argentina being the "first domino" if they don't pull a "Benny Big Bucks" routine out of their ass here!

JLee2027's picture

Argentina has made things abundantly clear. No means no. It's the Judge that doesn't get it.

CrashisOptimistic's picture

That works until they have to borrow more, which they must.

JLee2027's picture

As does everyone. In history, the only answer was a debt jubilee every 50 years. It makes sense to bring it back.

presidentsarkozy's picture

OH THAT S UTTER RUBBISH .

DEBT JUBILEES ARE FOR LAZY LATINS IN SOUTH AMERICAand southern eurooe --SEE THE OATTERN ALL TIED BY O E RELIGION WHICH WASHES AWAY SINS AND SO BY INFERENCE CAN WASH AWAY DEBTS .

MAN UP AND PAY YOUR DEBTS OR GO TO INTERNATIONAL BANKRUPTCY ORISON .

IS THE POPE ARGENTINIAN ???

ohh...wait a monent ..

jez's picture

Whatever nationality the Pope is, he could offer up a "bankruptcy orison".

 

Oh man, the wit.

DR's picture

UPDATE 1-China lends Argentina $7.5 billion for power, rail projects

Sat Jul 19, 2014 2:27am BST

(Reuters) - Argentina signed deals on Friday to borrow $7.5 billion from China at a time when the Latin American country cannot tap global capital markets because of disputes over unpaid debt.

Among the deals signed, Argentine President Cristina Fernandez and her Chinese counterpart, Xi Jinping, agreed on a loan for $4.7 billion from the China Development Bank.....

http://uk.reuters.com/article/2014/07/19/argentina-china-idUKL2N0PT2N220...

Ides of November's picture

I'm pretty sure this means we have our answer about what's going to happen then.

Watch out for the default next week, the same day the US announces Second Quarter GDP and a recession! Oh, happy days. Look for an unexpected 'false flag' July 29/30/31 to distract things.

 

Oh, and welcome to the BRICSA! or BRIACS? BRICAS? Who knows, one of 'em.

Turkey next, when's the Presidential Election again? Must be coming up soonies....

nuclearsquid's picture

the two sweetest words... De Fault

buzzsaw99's picture

hey argentina, tell griesa to stick it up his ass

JLee2027's picture

The rule of law died in the US years ago. It's nice to see open defiance finally beginning.

doctor10's picture

Could be wrong-but it looks like that is exactly what's happening here!!

presidentsarkozy's picture

fuck off pillock . a debt us a debt .. pay it !!!

agent default's picture

And debts that cannot be repaid will not be repaid.  Sorry judge :P.

Boomberg's picture

Just thankful that somebody knows how to spell "judgment".

Syrin's picture

I used to think a nation couldn't get more f'd up than Argentina/Venezuela/North Korea.   Then the liberals took over

Kaiser Sousa's picture

Argentina aint even trippin off these fucking vulture funds and the banker owned protectors in the US judicial branch...
Uncle Xi Jinping dropped by with some loan guarantees, trade agreements, and reminbi swaps...
FUCK OFF wall st., and banker owned US government..
and...

"Chinese President Xi Jinping has signed a row of oil and mineral deals with Venezuela. The Chinese leader is on a four-country tour of Latin America aimed to increasing influence in the region.

The 38 economic agreements are related to the production and development of Venezuelan oil and agriculture, as well as social and cultural expansion, says the BBC. The deals provides a credit line of $4 billion in return for Venezuelan oil and oil products, as well as allocating $691 million to explore Venezuela's gold and copper reserves, and an agreement to develop the countries' third jointly-owned satellite.

China is the second-largest market for Venezuelan oil after the United States.

The underlying purpose of the visit has been to secure more natural resources from Latin America to fuel China's long term economic expansion, BBC cites analysts. The Venezuela negotiations were preceded by visits to Brazil and Argentina.

At the BRICS summit in Brazil the Chinese leader, along with the other emerging powers Brazil, Russia, India and South Africa, launched a $100 billion BRICS Development Bank and a reserve currency pool worth over another $100 billion. Both will counter the influence of Western-based lending institutions and the dollar.

Read more: BRICS establish $100bn bank and currency pool to cut out Western dominance

The next stop was Argentina where President Xi Jinping agreed an $11 billion currency swap and extended much-needed investment to President Cristina Kirchner. Argentina’s economy has been locked out of the international capital markets since defaulting on its debt in 2001, and is staring down the possibility of another default."

http://rt.com/business/174588-china-oil-deal-venezuela/

NOTaREALmerican's picture

Guess the top 1% in Argentina are going to have to decide who their daddy is.  

Dr. Engali's picture

"The clock is ticking... and Argentina is furious..."

 

You agreed to take on the debt according to their terms in the first place you fucks. If you can't meet the terms then restructure, if you can't restructure then default, but the best thing to do is not take on debt you have no way of repaying.

JLee2027's picture

You mean they were forced into these terms, nearly 20 years ago, accept these terms or no money.

When they did falter, they did settle with 97% of the creditors 10 years ago, these are the holdouts 3% that would not accept the prior settlement (debt swap terms) and wanted full repayment, which is Argentina did that, would allow the orignal 97% to demand the same thing.

Nope, never going to happen.

Am I wrong?

Sun and Moon's picture

How cruel and insensitive of those creditors to insist the Argentina agree to repay the money they were borrowing!

Argentina "settled" 10 years ago by paying pennies on the dollar. Creditors were told they could accept that or nothing.

Of course, I don't really have much sympathy for the creditors. Argentina is a serial defaulter that has stiffed creditors seven times since independence in 1816. So anyone who would loan to Argentina would have to be loco.

 

JLee2027's picture

How cruel and insensitive of those creditors to insist the Argentina agree to repay the money they were borrowing!

You should check the terms they were forced into before you make that declaration. 

 

 

Of course, I don't really have much sympathy for the creditors. Argentina is a serial defaulter that has stiffed creditors seven times since independence in 1816. So anyone who would loan to Argentina would have to be loco.

Virtually every country on Earth is deeply in debt that will never be repaid. What makes this so different?

Sun and Moon's picture

They might have gotten much better terms if they hadn't defaulted so many times in the past!

And in any case, if the terms were so terrible they shouldn't have agreed to the loans. I personally think that the only reason Argentina agreed to the terms was that they never had any intention of repaying the loans. Argentina suckered yet another round of "investors".

JLee2027's picture

And in any case, if the terms were so terrible they shouldn't have agreed to the loans

I agree, but people desperate for money will sign anything. 

newdoobie's picture

Whoa! hold on there Tex. Argentina's .1% (bankers/politicians) grabbed the cash and sold out the country. (over and over again) If bankers in the US weren't getting their own cuts they wouldn't have loaned them anything.

CrashisOptimistic's picture

Yeah, wrong.

The 97% got rolled.  Argentina threatened to not pay and restructured to pay less and those creditors agreed.  This doesn't mean the other 3% are bound by it.  In fact, the law says specifically that they are not bound by it.

The 3% loans didn't get borrowed as part of the 97%.  They were seperate.  Every single piece of paper is seperate and has to be paid or restructured.  The fact 97% got rolled does not make the 3% evil for demanding their particular loan agreement be adhered to.

Saying that if they pay the 3% fully means the 97% can demand full payment . . . is no different than saying the 3% didn't get paid at all so the 97% should not be paid at all.

ozzzo's picture

Nonsense. The 3% (AKA vulture funds) did not loan any money to Argentina nor anyone else. They bought up distressed debt for pennies on the dollar and now would like to make incredibly huge profits by collecting dollar for dollar. The interesting question is, what form will their payoff to Judge Greasy-palm take if they are successful? Will he go through the revolving door and end up "consulting" a few hours per year for a six-figure salary, will he be paid princely sums to read speeches that someone writes for him, or will some anonymous organization just contribute to his "campaign?"

Jack4952's picture

Argentina got no "money". It merely got "credit" created out of nothing by hiiting a few key on a computer.

Has anyone here heard of "odious debt"?

Landrew's picture

As the pot calls the kettle black. What you really mean is close the IMF and World Bank and allow countries to issue debt in THEIR own currency paid by their own banks?

Dr. Engali's picture

No what I really mean is don't take on debt that you have no means nor intention of paying back.It's that fucking simple. If you take on the debt then you have to live with the consequences. The reason these countries can't access the debt markets is because they are serial defaulters and lenders know they plan inflating away their debts much like the U.S is trying to do now. 

newdoobie's picture

But Doc, the country got saddled with the debt. The money went to the bankers and politicians. Kinda reminds you of another country around here doesn't it?

walküre's picture

They default. What's next? How much of their debt is being held by IMF? Maybe BRICS will make an offer to support Argentina with BRICS funds in exchange for Argentina's commitment to BRICS?

Mme Lagarde, your hand is weaker than you think. There's life outside the "G7" you bitch.

BandGap's picture

Or maybe everyone lets them slide under the waves and goes in for cheap salvage.

FrankieGoesToHollywood's picture

There will only be a "default" if the TPTB decide there is a financial gain.  If not, the non-payment will not be catogorized as a credit event and CDS holders will have to pound sand.

 

We've seen this a dozen times before.

GooseShtepping Moron's picture

Interesting, but I since I seemed to have missed the development of this story, I'm going to have to go back and read up on it. There are some things I don't understand here. Why is a US Judge ruling on Argentinian bond payments?

Almost Solvent's picture

The bonds were offered through Wall Street banks with NY law and jurisdction written in.

That was the stupid part from Argentina's point of view (but they got 'better' intial terms in 2001 through Wall Street instead of issuing them in Argentina under Argentina law).  

newdoobie's picture

The people who set this up, on the Argentinian side, never planned on paying back anything. As Steve Miller sings they "Go on, Take the money and run"

Quinvarius's picture

Why do they even listen to this judge?  Is Argentina not a country with its own laws?

NOTaREALmerican's picture

If they default, the Argentine top 1% won't be able to borrow more money and have shovel ready infrastructure jobs programs to loot.  

Wealth is now measured by the potential for FUTURE borrowing.   

newdoobie's picture

Retired bankers in Argentina "I got mine, go borrow and steal your own"

El Vaquero's picture

 

Today, Griesa began the proceedings by hearing arguments about whether his orders bar payments to holders of U.S. dollar-denominated exchange bonds issued under Argentine law and payable in that country, without a corresponding payment to holders of the defaulted bonds.

When you dance with the devil...

 

Madcow's picture

no worries - I'm sure Gov-Co can simply pass along any investment losses to the US Tax-payer.