Key remarks made by Axel Kicillof, Minister of Economy and Public Finance of Argentina, in his presentation:
“Argentina´s debt restructuring case: latest developments and systemic consequences”

Event moderated by José Antonio Ocampo, Professor of Columbia University

Organized jointly by the Embassy of Argentina and the Americas Society/Council of the Americas

October 9, 2014

—

Prof. Ocampo on the Argentine debt case

The Argentine debt case is not just relevant for Argentina and Latin America but it has become, as the International Monetary Fund (IMF) said, into a case with systemic consequences.

—

Minister Kicillof On vulture funds

The vulture funds jeopardize, not only Argentina’s debt restructuring process but, all sovereign debt restructurings. Vulture funds bought defaulted bonds at a discounted price with the sole purpose of litigating. The ongoing litigation in New York courts refers to these bonds, bought in 2008, after Argentine’s debt restructuring.

—–

Minister Kicillof On the pari passu clause

The pari passu clause is a boilerplate clause in sovereign debt bonds. The current estimate is that around US$600 to US$900 billion in bonds are susceptible of suffering the same vulture funds’ attack that Argentina is suffering today.

—

Minister Kicillof On the systemic risks of the Courts’ interpretation of the
pari passu doctrine

The IMF, the US Government, all UN member countries that voted with Argentina and numerous experts, among many others, share the view that the Courts’ interpretation of the pari passu clause has negative systemic consequences for the international financial system and the future of sovereign debt restructurings.

—-

Minister Kicillof: A US Court ruling of impossible compliance

If Argentina pays the litigant vulture funds (representing 1% of bondholders) their claim, the remaining 7.6% of the holdouts will be immediately entitled to the sama claim. This represents US$15-20 billion, not US$1.6 billion. And if Argentina pays those US$15-10 billion to the holdouts, the RUFO clause could be triggered amounting to payments of US$120 billion (or US$500 billion according to some experts), to be paid at once. There is not a country in the world that can do so.

—-

Minister Kicillof On the 300% profit offer

In 2008 Elliot bought Argentine defaulted bonds for US$48 million. The Argentine Congress reopened the debt exchange offer under the same terms than the 2005 and 2010 debt exchanges. Argentina´s current offer to the litigants represents a 300% profit in only 5 years.