Swapping out of US jurisdiction

ARGENTINA - In Brief 17 Jun 2014 by Esteban Fernández Medrano

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During today’s press conference, Economic Minister Kicillof, reinforced the comments made last night by president Cristina Fernádez de Kirchner, in the sense that Argentina cannot honor the debt obligations that emerge from the Griesa’s rulings (because of the consequences it has on the remaining Holdouts Claims and the threat to trigger the RUFO clause), but on the same time it will do all that is in its power to continue paying restructured debt obligations. As a consequence the Economic Minister anticipated that the government is going to take two courses of actions. 1) It is going “to take the first steps” to initiate a new debt swap, to offer debt holders under US law the possibility to swap into Argentine jurisdiction, so as to continue receiving their payments, without the threats of embargos. 2) In light of alleged comments from Judge Griesa, in the sense that he does not intent to push Argentina into a new default. Argentina is going to send its lawyers to speak to the judge to sense if there is an alternative to the payment conditions that he already defined in its prior sentences. It is difficult to envisage that Judge Griesa would want to change its prior sentence, which was explicitly reaffirmed by the Court of Appeal and implicitly by the Supreme Court. Even though the sharp drop in Argentina’s reserves since 2012 (when the first sentence was made) might be a factor to re-consider the sovereign’s ability to honor payments to holdouts in full and cash, what Argentina seems to be saying is that it is going to meet the judge to look for the possibility to reach some sort of extra-judicial agreement with Holdouts, under Griesa’s tutelage. Griesa’s support is ...