Argentina Senate passes debt swap plan in defiance of U.S. courts

[Zorro]

Source: Reuters

Argentina's Senate on Thursday passed a bill aimed at circumventing U.S. court decisions regarding its defaulted debt by changing payment jurisdiction, sending the proposal to the lower house Chamber of Deputies for final approval.

The chamber, like the Senate, is controlled by government allies who are expected to vote the bill into law. Debate in the lower chamber is set to start next week. The Senate vote approving the measure was 39 to 27.

President Cristina Fernandez wants to resume servicing sovereign bonds that were restructured after Argentina's previous default in 2002. Her government missed a coupon payment on its restructured bonds in July, thrusting the South American country into default.

The proposed law, which says that foreign debt can be paid through intermediaries outside the United States, is Fernandez's attempt at getting back on a paying basis by putting government debt out of reach of U.S. courts that have jurisdiction over some of the original bond contracts.

Read more: http://news.yahoo.com/argentine-senate-passes-bill-put-debt-outside-u-165150849--sector.html

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Cristina's on a roll today.

[AgingAmerican]

1. Keeping the vultures at bay

nt

[Enthusiast]

3. +1 an entire shit load.

[Enthusiast]

2. Kicked and recommended!

If the US courts are against it I figure Argentina is in the right. They should fight to keep US militarized corruption from destroying their nation.

[Recursion]

5. A fool and his money...

Given Argentina's history, lenders who didn't see this coming get no sympathy from me.

[alittlelark]

4. KnR for Argentinas 'self interest'

....you go girl....

[another_liberal]

6. The Imperial Masters will not be pleased . . .

Beware, Argentina. After all, your Pampas are excellent "tank country."

[Calista241]

7. Just hope Argentina doesn't have a whole bunch of assets here in the US. n/t

[quadrature]

8. Buy the 10Year Argentina bond for $1000 ...

you will eventually get $300 back.

everybody wins

[Sparhawk60]

9. Short Term Pain, Long Term Gain

In the short run, this will cost Argentina. The bonds in question were sold to investors with the condition that any disputes with repayment would be resolved in US courts. By going back on this promise, it makes it very unlikely future investors will buy the bonds, or at least demand much higher interest rates.

And in the long run, this would be a good thing. Argentina is a land rich in resources, and without foreign debt, those riches will be used to develop and improve Argentina, and not third party banks.

Now, whether the world banks will allow a nation to be free of outside banks is another story.

[christx30]

10. But they will need

capital to develop those resources. Getting equipment and services there. And with this kind of action, they have guarenteed that no one will lend them money or help them in any way. They have proven themselves untrustworthy.

[Sparhawk60]

11. Very true

Very True, hence the short term pain. But in the long run, they will slowly be able to use their own capital, and ALL the profits will stay in country, witch would make even more capital available for development.

[hack89]

12. Not if they continue to repeat this pattern every couple of decades

your assumption is predicated on smart governance - Argentina has yet to demonstrate that ability.