Argentina agrees to borrow $5 billion from Wall Street banks

[Judi Lynn]

Argentina agrees to borrow $5 billion from Wall Street banks
January 31, 2016

BUENOS AIRES: Argentina’s central bank reached terms with seven Wall Street banks for $5 billion of loans as the government looks to bolster reserves ahead of talks with holdout creditors next week.

The one-year loan, finalised on Friday, will be backed by sovereign bonds, according to an e-mailed statement from the central bank.

Argentina has been seeking to shore up its central bank reserves after years of currency controls and policies that discouraged investment and depleted the country’s supply of dollars.

Unable to tap international bond markets because of a decade-long feud with creditors left over from the nation’s 2001 default, the country’s cash hoard dropped to a nine-year low last month.

More:
http://gulftoday.ae/portal/99b22a29-7e2c-43c3-91ba-acaa7dedb5a6.aspx

LBN:
http://www.democraticunderground.com/10141331567

[whatthehey]

1. If the banks are stupid enough to lend to proven deadbeats, more fool them

But then again even deadbeats can buy cars on credit at buy here pay here ripoff joints so perhaps this is just Mad Mike's Motor Mart on a global scale. Hope they installed the financial equivalent of a remote immobilizer or that cash ain't coming back, because you can't really send some bruiser round to break Argentina's thumbs when they inevitably default.

[forest444]

2. Actually, Argentina has been meeting its debt/bond payments in full for 11 years.

Some of its foreign bondholders have had their payments held up over the last 18 months by a corrupt Wall Street judge working for Cayman Islands vulture funds, which is different.

Argentina resumed payments to bondholders in January 2005 after restructuring (which Bush and the IMF opposed). By 2010, 92% of its bondholders had accepted and were collecting payment at 9% interest (at considerable cost to Argentina). The bonds themselves, moreover, also doubled in value from 2005 to 2013, and have since risen another 60% since despite ongoing vulture fund attacks.

Keep in mind that three vulture funds bought Argentine bonds on the black market (not from Argentina), and are now demanding 16 times their investment. Despite already collecting on the CDS default insurance, they could sell their bonds like normal people and still make about 4 times their investment - but they're using corrupt Manhattan courts (imagine that!) to get their 1,600% ransom, and holding up other bondholders' money until they do.

Small wonder global bond markets are migrating to London and Paris!

The largest such vulture fund belongs to Paul Singer, who pulled a similar hostage-taking tactic against Delphi Automotive's bondholders in 2009 in order to collect a 3,000% payout on Delphi bonds. He also used Delphi to collect billions in TARP funds (never repaid) despite operating out of the Caymans. Under Singer's control, Delphi moved half its manufacturing to China - which is why U.S. cars are no longer really "made in America" on the inside.

Singer is also a top GOP superpac donor, as well as to the Narco Rubio campaign.

Argentina meanwhile continues to make escrow payments for those foreign bondholders who can't collect thanks to Greasa's illegal ruling (fortunately, many have been collecting by opening accounts in Buenos Aires).

[PoliticAverse]

3. "black market"s are illegal. There was nothing illegal about the bond purchases, bonds are traded

on the secondary market normally. You wouldn't claim US Treasury bonds purchased
on the secondary market have no value because they weren't purchased directly from the
US Government would you? BTW Judge Greisa's ruling was upheld by full United States Court
of Appeals, and the United States Supreme Court didn't reverse the ruling (7-1 decision).
.

[forest444]

4. I never claimed they have "no value" - on the contrary.

As I mentioned, the market-value offer for said bonds still stands and would yield the vulture funds holding them close to a 4-fold profit if they sold them today.

The problem is that they expect not only full face value (which those issues are pretty close to); but also punitive changes and an above-market interest rate schedule determined by Greasa, who, moreover, is holding bondholders payments hostage on Singer's behest until the 1,600%+ ransom is paid.

That is, 92% of bondholders (actually around half, because many are collecting in Buenos Aires) are having their payments held up to satisfy the roughly 1.6% represented by vulture funds - which aren't even American funds, btw, but from the Caymans and London. TARP baby Singer, for his part, already collected the CDS default insurance anyway - a scam in itself, since the bonds are still being fully serviced.