How to Interpret Argentina’s Defiance of Debt Ruling by Court

Argentine President Cristina Fernandez de Kirchner ruled out complying with a U.S. court order that holders of defaulted bonds be repaid in full. Here’s how former government officials in the country say her words, delivered in a nationwide speech last night, should be interpreted.

*Mario Blejer, vice president of Banco Hipotecario, former president of central bank *“She didn’t say ‘we’re not going to negotiate.’ She didn’t say ‘we are going to negotiate,’ but she didn’t rule out the prospect of negotiation. *‘‘I don’t see any other solution other than to negotiate. People say that since they got a ruling in their favor why would they negotiate. They will because one risk is they will get nothing and the other risk is that they are paying huge amounts of money in legal fees. If they get an offer that would give them a good profit, I don’t see why they would not be willing to negotiate.”

*Miguel Kiguel, director of EconViews, former deputy economy minister *“What seemed important to me is that she was very careful with her words. Compared to other moments when she has said ‘we won’t obey the ruling, we won’t pay’ this time her speech, even though it was very critical of the holdouts, the vulture funds, she was very careful with her manner and didn’t close any doors” *Fernandez’s talk of extortion “were words meant for the Argentine public rather than for outside and there’s still a long road to walk” *“The rational thing to do would be to negotiate and avoid a default because Argentina’s economy is in a delicate place – recession, low reserves, high inflation, a need to go to capital markets, lots of import controls. It’s a delicate situation with little margin”

*Orlando Ferreres, director of Orlando Ferreres y Asociados, former deputy economy minister *“I think that what Cristina said in her speech is that she wants to prepare a negotiation with the winners of the case to find a way that would allow for payment now in bonds or some other form that is determined by the ruling in order not to violate the Rights Upon Future Offers clause. It seems to me she’s saying ‘we can’t pay in cash’ because the total would be $15 billion” *“Any instance of not obeying or not paying - paying in Buenos Aires would also be considered evading justice - I don’t think they’ll go down that route because it would be a total disaster. I think they need to come to an acceptable negotiation” *“They have a ruling in their favor but if Argentina defaults that’s no good for anyone. They’ve already been waiting 12 years so I don’t think it’s impossible that they will wait a bit longer and find a middle ground. At the end of the day they are realists” “If they come to a good agreement and open up access to capital markets Argentina could turn the page”

*Maximiliano Castillo, director of ACM, former economist at the central bank *“The government is so unpredictable and can change its mind so quickly and so significantly. It could be that they do a swap to change the legislation and that would lead to a technical default just as much as they could go for negotiation to resolve this issue” *“The doors are open for both options and it seems to me that the government doesn’t know which option to take. The market was expecting a clearer definition and that uncertainty means people are assuming the worst and that’s why bonds are falling” *“I think they need to obey the ruling in the best terms for Argentina if there’s a chance to negotiate, be that by negotiating the number of installments or with bonds”

To contact the reporters on this story: Charlie Devereux in Buenos Aires at; Camila Russo in Buenos Aires at

To contact the editors responsible for this story: Brendan Walsh at Daniel Cancel

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