December 22, 2014
Negotiation with vulture funds fails: Argentina forced to default
Economy Minister Axel Kicillof confirmed that no agreement was reached between Argentina and vulture funds saying the federal government offered hedge funds suing the country over its defaulted “similar conditions” to enter the debt swap Argentina carried out in 2005 and 2010. The government “will not sign anything that could jeopardize the future of the country,” Kicillof stated following a round-the-clock meeting with court-appointed mediator Daniel Pollack in New York.
Kicillof added the government will analyze “every possible option” to pay the bondholders that did not accept the 2005 and 2010 debt swaps.
“We consider the situation is unfair,” said the Economy Minister during a press conference held at the Argentine consulate in New York City that followed the meeting with Pollack.
“This is not a default. Default is not to pay. Default is a consequence of a country’s lack of liquidity, not its cause,” Kicillof said.
“Argentina has money. Argentina pays and will continue to pay exchange bondholders. And we also want to reach a fair, sustainable agreement with 100% of bondholders, but we do not want to break our compromises,” he added.
Kicillof revealed Argentina made two offers to holdouts. Both were rejected. The first one was a stay request in order to continue negotiations, and the second one was an offer to restructure their debt within the same conditions agreed in the 2005 and 2010 swaps.
“Vultures wanted to receive payment above the ones made to exchange bondholders. This would be illegal, as the RUFO clause states Argentina cannot make a better offer than the one reached during the 2005 and 2010 negotiations,” Kicillof explained.
“They want us to break the law but we will not sign any agreement that compromises the country’s future,” he concluded.
Meanwhile, expectations soar over another meeting where holdouts were analysing an offer made by Argentine private bankers seeking to buy defaulted bonds from hedge funds suing the country.