Argentina is preparing to announce the second default in 13 years

Argentina is preparing to announce the second default in 13 years

Argentina is preparing to announce the second default in 13 years

The U.S. Supreme Court dismissed the appeal on the decision of Argentina, according to which the country should pay creditors more than $ 1.3 billion

That is the sum of Argentina should those investors who in 2002 after defaulting Latin American countries refused to conclude swap agreements on bonds.

Investors mainly hedge funds, that is not surprising, because hedge funds have a special direction, which invests in a highly risky assets in hopes of getting a good return.

Now, after the U.S. Supreme Court, these funds have the right to submit claims against Argentina in U.S. courts and to seek disclosure of its assets worldwide, with an option to arrest.

In the very same country are indignant and called the U.S. Supreme Court extortion. Argentine President Cristina Fernandez de Kirchner has said that the country will not declare a default, but also to pay the debts she can not.

Recall that Argentina defaulted in 2002 totaling almost $ 100 billion in the course of restructuring the majority holders agreed to exchange old bonds for new ones with a big discount, but not all agreed.

Last year, the U.S. Supreme Court decision that Argentina will pay its creditors only after complete satisfaction of obligations to disagree.

Thus, the country is once again on the verge of bankruptcy for the second time in less than 15 years may declare a default.

American handwriting

The court’s decision can not but cause surprise.

Purely American handwriting with American financiers same. Not only that attack U.S. banks and hedge funds to the debt markets of different countries sometimes put these countries in a very awkward position, so now, in fact, created more and precedent where any risky fund guaranteed protection.

Given that Argentina does not have access to the capital market, the country seems to be another bankruptcy matter resolved.

Market Reaction

Country’s stock market today to win back U.S. Supreme Court decision in full. Merval index fell by 10%. Note that since 2012, the index showed a virtually vertical takeoff. The fact that the big players always know in advance to confirm the dynamics of the market in the last days before the announcement of the news of the decision of the American court. Apparently, informed speculators took profits, and then formed the short positions.