Post date : 07.23.2014 7:03 pm
Tonight, Argentine President Cristina Kirchner took to the airwaves in an impromptu television address. According to news reports, she reiterated her hilarious position that “Argentina can’t default because Argentina pays its bills.”
She then rambled on to say “they will have to invent a new name” [for default] “because Argentina pays its bills.” President Kirchner also cited Argentina’s refusal to make an agreement with creditors, citing RUFO and saying that it would “destroy previous debt restructuring.”
We reported yesterday that RUFO is a smokescreen for Argentina, an excuse likely invented by its law firm Cleary Gottlieb as a reason for not negotiating. In yesterday’s hearing, Cleary’s lawyer Jonathan Blackman argued that RUFO would prevent Argentina from reaching an agreement with creditors, but the judge didn’t see it that way, and ordered Argentina and its creditors to negotiate.
Argentina’s creditors have stated time and again that they would negotiate to give the country more time in exchange for progress toward a settlement. Exchange bondholders could decide to waive RUFO in the event of a settlement, and investment banks have come forward with creative solutions for Argentina to solve this. What’s needed is for them to sit down and talk these things through.
But at this hour, that’s not happening. Instead, Argentina’s leaders make speeches and excuses. Tonight President Kirchner said “I don’t know whether to laugh or cry,” when describing Argentina’s situation. It’s unfortunate that her behavior is pushing her citizens to tears.
Who benefits from all of this? Certainly not Argentina. It’s worth noting that Cleary Gottlieb has been the most prolific in arguing RUFO as reason not to negotiate. Back in May, a leaked Cleary memo advised Argentina to default as a strategy. Cleary advised that after a default, Argentina could re-issue bonds under Argentine law, thereby evading the jurisdiction of U.S. courts.
The leaked Cleary memo sparked outrage, but Argentina appears to be following Cleary’s advice to the letter: Default, Re-issue, Evade U.S. Courts. And we’ll keep representing you.