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Bonds & Peso Slide As Fernandez Slams Holdouts For "True Aggression Against Argentina"

Tyler Durden's picture




 

With hours to go until Argentina's grace period runs out and default occurs, investors are less than frantically selling Argentine bonds and pesos. They are lower but do not appear in full panic mode as we presume investors cling to hope that Argentina folds and pays off the holdouts (though there has been no sign of that so far). ARG 2033 bonds are down 3 points to 81 and the black-market peso is modestly weaker at 13.0 (near its record lows). Argentine CDS tightened modestly (as BofA warns the facts surrounding Argentina’s bond payments continue to be unique and deciding if CDS are triggered could take longer than expected) but 1Y CDS are holding at 4600bps (equivalent) - a 52% probability of default. Paul singer continues to defend himself (and the holdouts) from claims they are "dangerous fundamentalists" hell-bent on making it impossible for foreign sovereigns to restructure their debts.

Bonds are dropping but not in panic mode yet as CDS are priced for around a 52% probability of default.

 

Argentine President Cristine Fernandez speaks:

  • *ARGENTINA HAS PAID DEBT ON TIME WITHOUT MARKET ACCESS:FERNANDEZ
  • *ARGENTINE DEBT-TO-GDP RATIO AMONG LOWEST IN WORLD: FERNANDEZ
  • *HOLDOUTS UNDERTAKING TRUE AGRESSION AGAINST ARGENTINA:FERNANDEZ
  • *FERNANDEZ SAYS JUDGE GRIESA HASN'T BEEN NEUTRAL IN BOND CASE
  • *ARGENTINA REITERATES WILL TO PAY 100% OF CREDITORS: FERNANDEZ
  • *FERNANDEZ SAYS HOLDOUTS SHOULD ACCEPT PREVIOUS SWAP TERMS

But Elliott's Paul Singer defends himself and the holdouts...

As of this writing, the U.S. Supreme Court’s final rulings on two cases pitting our subsidiary, NML Capital, against Argentina have generated more than 500 news articles. In addition to provoking an endless array of bad plays on the phrase, “Don’t cry for me, Argentina,” the flood of coverage has occasioned quite a bit of commentary about Elliott. According to some, we are a positive force in the markets, because “credit markets function better when the rule of law is upheld” (New York Times, June 26). According to others, we are “dangerous fundamentalists” hell-bent on making it impossible for foreign sovereigns to restructure their debts (Foreign Affairs, June 24).

 

Elliott does not seek such publicity. Obviously, our lives would be easier if the press cared less about this particular position and/or similar positions that attract attention. The Economist ran a piece rebutting the silly and hyperbolic claim that our case will encourage lots of other investors to follow our lead, dryly noting that “There are easier ways to make money.” We think most other investors would certainly agree. As we have noted, one of the reasons that we continue to see attractive opportunities, even in the current yield-hungry environment, is that complex, labor-intensive situations are not everyone’s cup of tea.

 

While many journalists and commentators often badly misunderstand what Elliott is all about, we understand that this publicity is occasionally the cost of adhering to our philosophy, which is to seek truly uncorrelated positions in which the key determinants of unlocking value are our own creativity and hard work. Once we are in these positions, we see them through and try to achieve the best return possible. That commitment is especially strong when we indisputably have the rule of law on our side.

 

More than once during the Argentina saga, we have been erroneously described as a fund that goes out of its way to seek out litigation. That description is false – litigation is uncertain, expensive, difficult and time-consuming. It is a last resort to which we only turn when a dispute becomes impossible to resolve through negotiations, as has been the case for many years with respect to Argentina due to the Argentine government’s refusal to negotiate with us. However, if we must litigate in the course of enforcing our contractual rights, then we will not shy away from it. And if publicity is also a part of that equation, then so be it.

The IMF just gave Argentina the kiss of death...

  • *IMF SEES NO BROAD CONSEQUENCES OF ARGENTINA POTENTIAL DEFAULT

As BofA warns this may not be simple

  • *DETERMINING ARGENTINE CDS CREDIT EVENT WOULD BE LENGTHY: BOFA
  • *DEFINING EVENT OF A DEFAULT FOR ARGENTINA NOT CLEAR-CUT: BOFA

Determining whether Argentina’s failure to reach a settlement with holdout creditors tomorrow will trigger a default on bonds and credit-default swaps isn’t clear cut, according to Bank of America Corp.

“To make the determination on whether a default had occurred, a process that would normally take around a day, could take much longer,” Jane Brauer, a New York-based strategist at the bank, wrote. “We expect that Argentina will continue to claim that it paid in full and on time, even though it was fully aware, at the time of deposit, that the recipient trustee would likely hold the funds.

 

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Tue, 07/29/2014 - 14:25 | 5018776 PlusTic
PlusTic's picture

Let that peso crash...hopefully a few western banks get fukked in the process

Tue, 07/29/2014 - 14:29 | 5018800 Publicus
Publicus's picture

Time for Argentina  to excerise it's sovergnty with foreign operation and military operations.

 

Or just say so long to the USD, trade with the BRICS instead.

Tue, 07/29/2014 - 14:30 | 5018823 THX 1178
THX 1178's picture

Now is a good time for Argentina to invade Iraq. ISIS is starting to get out of hand.

Tue, 07/29/2014 - 14:34 | 5018830 Publicus
Publicus's picture

Argentina should take military action against the hedge funds, show them who is the boss.

This is an act of war against Argentina, and in war, people die.

Tue, 07/29/2014 - 14:35 | 5018844 Hippocratic Oaf
Hippocratic Oaf's picture

P to the R, bitchez................

 

UBS Discloses More Than $600 Million Of Claims Filed By PR Investors
Tue, 07/29/2014 - 14:43 | 5018883 john39
john39's picture

the same paul singer warning about the EMP attack?  odd that.

Tue, 07/29/2014 - 15:00 | 5018970 NotApplicable
NotApplicable's picture

CDS trigger????

Unpossible!

Tue, 07/29/2014 - 17:22 | 5019622 disabledvet
disabledvet's picture

"Now here's your Singer Sewing Machine Bitch!"

Tue, 07/29/2014 - 14:45 | 5018892 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

As the old saying goes, "You can't get blood out of a turnip!"

Tue, 07/29/2014 - 17:22 | 5019628 disabledvet
disabledvet's picture

They've got billions of barrels of oil. "Throw in a cross stitch with that too!"

Tue, 07/29/2014 - 14:58 | 5018920 TheRideNeverEnds
TheRideNeverEnds's picture

Are you sure?  I'm think in war people sell VIX and gold to buy more of the stable bellwethers from the Russell 2000. 

Tue, 07/29/2014 - 15:18 | 5019063 astoriajoe
astoriajoe's picture

Is it an act of war to take out the debt in the first place?

Tue, 07/29/2014 - 15:39 | 5019118 piratepiet
piratepiet's picture

my guess : when the peso crashes, small holders of pesos, like your average pensioner get fukked. Western banks ? Maybe.  Besides, corporations are not people.   Do you not feel with your elbows this drama is likely staged by elites in both Argentina and US to profit from it ?  Why else is this kind of shit happening over and over in Argentina ?

Tue, 07/29/2014 - 14:26 | 5018781 Itchy and Scratchy
Itchy and Scratchy's picture

Ole!

Tue, 07/29/2014 - 14:27 | 5018785 Gringo Viejo
Gringo Viejo's picture

The $ is a peso. Same, same......

Tue, 07/29/2014 - 14:27 | 5018787 Grande Tetons
Grande Tetons's picture

Wang chung is Chinese for default. 

Tue, 07/29/2014 - 14:27 | 5018799 _ConanTheLibert...
_ConanTheLibertarian_'s picture

If they don't default now then happy days are back again?? I mean, not defaulting doesn't fix anything. Just do it.

Tue, 07/29/2014 - 14:46 | 5018896 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

The issue I have is did they not already default? How can you default twice on the same debt?

Tue, 07/29/2014 - 15:41 | 5019201 robilla
robilla's picture

This would be defaulting on the NEW debt that was spawned from the old debt... which was defaulted on and replaced the new debt (that's being defaulted on anew), except for the hold out portion that they are still defaulting on and not settling or negotiating about.

Next they will restructure the "new" debt into an even newer debt, with a haircut, then default on that as well. It's circular logic.

Perfectly legal... move along.

We'll be better educated on the matter when the US does it.

Tue, 07/29/2014 - 14:28 | 5018803 CrashisOptimistic
CrashisOptimistic's picture

As regards a credit event -- why is there anything special about now?

For many years they have not paid interest to the holdout bond holders.  So didn't they already default?

Tue, 07/29/2014 - 14:35 | 5018848 NoDebt
NoDebt's picture

No, the debt was restructured.  The "hold outs" just didn't sign on to the restructuring, so, they have to take the long road (through the courts), in hopes of an eventual victory on better terms.  On paper, in a court decision, those hold-outs have won.  But good luck collecting on that decision.

Regardless of what happens, I would not hold my breath that anyone will officially declare a "default".  CDSs would be triggered, real money would have to change hands, lost bets would finally have to be paid, etc.  Big 'ol mess.

Tue, 07/29/2014 - 14:49 | 5018909 john39
john39's picture

the term default obviously has no meaning anymore...  if bond holders can go to court, win and still not get paid... and that is not a default, then defaults don't exist.

Tue, 07/29/2014 - 14:50 | 5018921 NoDebt
NoDebt's picture

Exactly.

Tue, 07/29/2014 - 15:45 | 5019225 robilla
robilla's picture

This isn't a new thought or action. It happens all the time.

You take a civil action out against someone that maimed you and caused injury, you win and are awared a settlement.

Great... but what if the guy that hit you doesn't have $10mm to pay you, then he moves to FL and gets even more bankruptcy protection (thus you can't take his primary residence).

Look at the OJ civil suit. The family got squat even though the civil jury found him guilt. He just hid.

 

Same game, same outcome.

But definitely a default... so let's get that CDS rolling. Otherwise, what's the point of it at all.

 

Tue, 07/29/2014 - 16:09 | 5019337 gallistic
gallistic's picture

Guys, it is a hell of a lot more complicated than that. There are just too many other aspects to cover in order to get a true understanding of this situation. I will not even try to discuss any of them in depth right now.

Most people think Argentina is about to default, because Reuters, Bloomberg, et. al. just take a mental shortcut and lazily tell you Argentina is defaulting. Regardless of what the mainstream spin machine tells you, that is simply not the case.

Much closer to the truth is that Argentina already defaulted 12 years ago, and some greedy idiots did not get the memo. They refuse to recognize that fact in the hopes of making an obscene killing ($$$) on a long-dead carcass.

Here are some simple facts that might shed a little light and serve to gain some perspective.

92% of the affected creditors have settled in one way or another. The vultures in question own a mere 1.6% of the total debt that defaulted in 2002. 

Singer and his fellow vultures were not even part of the class of investors originally affected by the default! They knowingly bought the bonds after the default for mere pennies on the dollar and then turned around and demanded to be paid the full face amount and vig. These vulture jackasses are just that special, that they have to be paid in full on previously defaulted debt.

The problem is that if the "special people" get paid in full, the other creditors will have to be treated equally. This would force Argentina to effectively re-assume their defaulted debt and establish the principle that a (non-Anglo, of course) country cannot default- ever.

We haven't even mentioned synthetics and CDSs.

There is a hell of a lot more to this than meets the eye, and I for one would find it very amusing and have a good laugh if Argentina flat-out repudiated the debt and told the vultures to blow it out their ass.

Things would get very interesting then...

Tue, 07/29/2014 - 14:50 | 5018916 El Vaquero
El Vaquero's picture

We know where we're headed anyway.  I'd rather deal with the big'ol mess sooner rather than later.  Slow pain vs fast pain.  Here's to a default!

Tue, 07/29/2014 - 14:29 | 5018806 Bill of Rights
Bill of Rights's picture

Time to back that Peso with Silver....Bitches.

Tue, 07/29/2014 - 14:31 | 5018810 NoDebt
NoDebt's picture

" In addition to provoking an endless array of bad plays on the phrase, “Don’t cry for me, Argentina,"

OK, guys, in all fairness, we own that comment here on ZH.  

Tue, 07/29/2014 - 14:30 | 5018813 Cognitive Dissonance
Cognitive Dissonance's picture

Soon calling a 'state' names will be considered "true aggression against the state".

Sticks and stones might break your bones but names will get you placed in prison.

Tue, 07/29/2014 - 17:24 | 5019635 disabledvet
disabledvet's picture

How about calling the Head of State names?

Tue, 07/29/2014 - 14:32 | 5018826 PontifexMaximus
PontifexMaximus's picture

Kyle Bass must have a woody seeing this news.

Tue, 07/29/2014 - 14:33 | 5018836 Grande Tetons
Grande Tetons's picture

I think he was pimping the opposite side of the trade. But, yeah...he probably has a woody. 

Tue, 07/29/2014 - 16:16 | 5019404 gallistic
gallistic's picture

He is still sitting in a pool of Japanese blood, isn't he?

Just a little bit longer!

Any day now...

Any day now...

Tue, 07/29/2014 - 14:35 | 5018846 ebworthen
ebworthen's picture

Man, poor Argentina is like the middle class of the U.S., they are expected to pay their bills or else.

Too bad they aren't GM, Citi, AIG, Fannie Mae/Freddie Mac, or U.S. .gov itself.

If they were - Hank Paulson would be at ECB saying "tanks in the streets!".

Tue, 07/29/2014 - 15:09 | 5019023 Chupacabra-322
Chupacabra-322's picture

Congressman Brad Sherman Martial Law if We Voted No

https://m.youtube.com/watch?v=rEYOl9-L1U8

These Elite Scum Fucks actually believe we've forgotten about The Crimes Against The American People & Crimes Agaist Humanity.

Thier day of reckoning is fast & vast approaching them.

Tue, 07/29/2014 - 14:38 | 5018869 youngman
youngman's picture

So maybe the Socialists will live within their means now...NOT....everyone is on the dole there too....easy government money is how they go.....they have assets..just cant sell them to anyone now...its amazing to watch such stupid ideas come to fruition...a pietrie dish for socialsim programs....

Tue, 07/29/2014 - 22:28 | 5020882 gallistic
gallistic's picture

Fail...

Red one for you youngman; gotta keep you honest here. 

Argentinians were good little capitalists and our bestest buddies when they assumed the debt and later defaulted.

They were not (gasp! the horror!) socialists at all...

Tue, 07/29/2014 - 14:41 | 5018878 NoTTD
NoTTD's picture

' "dangerous fundamentalists" hell-bent on making it impossible for foreign sovereigns to restructure their debts.' = I'd like you to pay me back the money I loaned you, pursuant to our written agreement.

 

Sound scrazy to me, too. 

Tue, 07/29/2014 - 14:49 | 5018912 NoDebt
NoDebt's picture

You're not even trying to see this from poor, abused Argentina's point of view, are you?  They're just a helpless sovereign nation with no recourse, abused by the US courts and predator investors.  That's the party line here, so please stick to it.

Just wait until the US starts to "restructure" it's debt. Everyone will come out of the woodwork and cry for the poor, helpless United States, too.  How unfairly we've been treated.  You'll see. 

 

Tue, 07/29/2014 - 17:43 | 5019698 NoTTD
NoTTD's picture

You're right.

I'm not.

Tue, 07/29/2014 - 14:51 | 5018924 john39
john39's picture

the debt was largely conjured out of thin air...  none of this shit is real and the whole system needs to burn, along with the satanists who created it.   Honest obligations are one thing, but, when the entire system is fraud, and the insiders get to walk on their obligations, why should the masses have to be enslaved with fake debt?  burn it all down.

Tue, 07/29/2014 - 17:44 | 5019700 NoTTD
NoTTD's picture

Burn it.

Tue, 07/29/2014 - 18:03 | 5019754 Boxed Merlot
Boxed Merlot's picture

the entire system is fraud, and the insiders get to walk on their obligations, why should the masses have to be enslaved with fake debt?...

 

Agreed.  Certainly reminds me of the parable of Jesus, (did I say that?  I know what a risk it is to invoke that name on ZH, but oh well), that the jew Matthew penned about a then TBTF bailed out entity who failed to extend the same blessing and was called to account in a rather appropriate manner.  I think it should be noted among professing Christians that this teaching not only repudiates the "forgiven and forgotten" notion but establishes the fact God will draw back into account misdeeds and debts previously "forgiven" if the recipient fails to extend the same.  Matt. 18:23-34.

 

And in a somewhat related vein, why wasn't I allowed to purchase insurance directly from AIG at the banks rate to cover my mortgage back in the day?

 

jmo.

 

 

 

Tue, 07/29/2014 - 15:08 | 5019016 NotApplicable
NotApplicable's picture

Well, other than the fact that there is no "you" in this equation, I'm in perfect agreement.

Anybody willing to loan money to an abstract collective known as government deserves everything they get in return for making a deal with the devil.

Tue, 07/29/2014 - 14:45 | 5018893 Itchy and Scratchy
Itchy and Scratchy's picture

Sounds like 77m + 1 in debt payment arrears now?

Tue, 07/29/2014 - 14:59 | 5018969 Sun and Moon
Sun and Moon's picture

Could the holdouts initiate asset seizure on the Argentinian Embassy? I wonder how much it is worth.

Tue, 07/29/2014 - 15:02 | 5018984 ghostzapper
ghostzapper's picture

CDS "only" at 52% but not the most liquid thing in the world besides who's gonna hammer em and make them soar when the same guys are long the debt?

IMF says it's all good.

So now we just need an endorsement from Gartman to get long the debt . . . . . .

 

And we have 100% probability of default. 

Tue, 07/29/2014 - 15:09 | 5019018 Yancey Ward
Yancey Ward's picture

Time for the Yves Smith to demonstrate once again that she is a moron.

Tue, 07/29/2014 - 15:27 | 5019039 HDaryl
HDaryl's picture

Ms. Fernandez:

Call:

1) BRICS Development Bank

2) China's Xi Jinping

3) Russia's Vladimir Putin

4) Brazil's Dilma Rousseff

One or more of these folks should be able to assist you in restructuring, and breaking the dollar stranglehold of the corrupt US and UK and IMF and World Bank and BIS banks.

You only need to cowtow to Elliott et al if you still want to continue to subject your country to these corrupt institutions and their insane one-sided policies and jurisdiction.

Maybe it's time to break the chains? And tell all of the above and Elliott's Paul Singer to go f*#k themselves. Permanently.

Cheers!

Tue, 07/29/2014 - 16:32 | 5019461 NoWayJose
NoWayJose's picture

Until the 'holdouts' get burned, they will remain a parasite on the global financial system. I hope Argentina defaults.

Tue, 07/29/2014 - 23:14 | 5021023 gallistic
gallistic's picture

Funny you should mention it....

Kirchner is meeting with Rousseff as I type this. MERCOSUR nations are in Venezuela right now hammering out alot of deals and working on agreements reached in the very important BRICS/MERCOSUR summit that just took place under everyone's noses, without any substantive MSM coverage.

As a matter of fact, all South American nations just endorsed a very strong declaration of support for Argentina against the vultures.

Or just dump this into a translator if you do not speak Spanish.

I am well aware that very few people are strong enough to bear reading something they disagree with and actually consider it. That second link is from a dirty, socialist, Bolivarian website, so it is only for the bold ones who can hold their nose and tough it out.

Tue, 07/29/2014 - 15:14 | 5019045 piratepiet
piratepiet's picture

Can anybody explain to me why this is happening in Argentina, and not, say in the Netherlands ?

Tue, 07/29/2014 - 15:19 | 5019072 youngman
youngman's picture

Because Tulips are so 3 centuries ago...

Tue, 07/29/2014 - 15:28 | 5019131 piratepiet
piratepiet's picture

ok:-), but that was the boom and bust of one asset. 

Tue, 07/29/2014 - 15:28 | 5019129 potato
potato's picture

Haha these hedgies are so out-of-touch. "Rule of law"?? Try AT&T's retroactive immunity granted by the government when att got caught?

You dont fvck with any government. It's a bad bet.

Tue, 07/29/2014 - 17:19 | 5019605 HDaryl
HDaryl's picture

The "Rule of Law" is what the Hedgies, TBTF banks, and Governments, etc. use AGAINST the little people. The "Rule of Law" doesn't APPLY to these same "Big" groups. 

Argentina is "little" people. Until such a time as they tell the US and EU banking cartel and the IMF and the World Bank to go fvck themselves.

Frankly, I'm shocked that the BRICS, or China, or Russia, or some combination thereof haven't stepped up and provided alternative non-dollar financing for this high optic opportunity-contingent on Argentina defaulting and sticking it to the US and Elliott....et al

Tue, 07/29/2014 - 17:05 | 5019566 Argieboy
Argieboy's picture

Yeah go ahead! Default our sovereign debt! I am a farmer in Argentina and a devaulation is always a bliss every time it takes place. My products are sold in dollars when we hace to export them. See that`s the big difference between dealing in your life with fiat papers (bonds, bills, stocks) and real things like farms down here.. Plus, everyobdy who lives out of Fiat income (regular employees, people who live out of state pesos hand outs) And yes, this people will wake up on thursday with a big devaulated scenario and they will probably go through a bloodbath..as they will go out in the streets in anger..  i live deep in the countryside and I am heavily armed just in case. Viva Singer!

Tue, 07/29/2014 - 17:44 | 5019707 NoTTD
NoTTD's picture

See you on the barricades, amigo.

Tue, 07/29/2014 - 17:45 | 5019708 NoTTD
NoTTD's picture

See you on the barricades, amigo.

Tue, 07/29/2014 - 18:46 | 5019922 Quantum Nucleonics
Quantum Nucleonics's picture

Since when did, "pay your bills," become aggression? I tihink these socialists actually believe there own BS. Guess that's true from the administration that created a Ministry of Truth.

Wed, 07/30/2014 - 12:44 | 5023065 Paracelsus
Paracelsus's picture

I remember after the Falklands/Malvinas conflict,the IMF gave a quickie loan to shore things up.

The Argie Air Force guys said" we want to be paid out first!".

There's that old community spirit.We all suffer together....

Wed, 07/30/2014 - 12:45 | 5023074 Paracelsus
Paracelsus's picture

Shakespeare had it right. "First thing we'll do is kill all the lawyers!".

Do NOT follow this link or you will be banned from the site!