Argentina’s Debt Drama: The Plan to Exit Default

REPLAY VIDEO
Your next video will start in
Pause

Recommended Videos

  • Info

  • Comments

  • VIDEO TEXT

Aug. 20 (Bloomberg) -- Torino Capital CEO Jorge Piedrahita and Bloomberg’s Katia Porzecanski discuss how the government of Argentina is considering a plan to exit default, by snubbing a U.S. court ruling. They speak on “Taking Stock.” (Source: Bloomberg)

Reporter.

You have been covering this story.

Explain what is the plan?

They have announced a plan for the past.

Seems like this time there has not been counter information.

They said they will submit an approval to congress that says bondholders who are currently unable to get debt payments because of a u.s. ruling blocking payments can give their money and argentina.

Basically throws the contracts to the wind and says you can get the payments and argentina.

And if you want to formalize things, you can go ahead and swap your bonds for new ones that are under local legislation.

What is your thoughts about this proposal by the argentine government?

They will need to take some things out of the headlines.

By announcing these, they have taken attention away from corruption charges against the vice president, higher unemployment, etc.. this is a political issue as much as international finance?

Yes.

The president of argentina.

Exactly.

The plan and self has very little chance of becoming real.

There are too many difficulties in the plan to be implemented.

First of all, they would be out of their mind to change to local paper.

It is a different operation.

The other thing is even -- anyone that anticipates is violating a u.s. court order.

U.s. institutions should not participate.

Anyone who has this in the u.s. should not attach anything close to this because it violates court orders.

Remember they can freeze accounts.

They could find argentina on a daily basis.

They could order investors to go claim the money and put it into an account of the court that later can be distributed.

This is not over yet.

I think we will see many of these events over the next few weeks and months.

Based upon the people you have spoken with, what is the response for investors?

It is surprising because there are some investors that cannot involve themselves.

They are real money investors and certain restrictions.

They will not be able to participate.

Those people will have to sell bonds to the people more adventurous.

Some hedge funds have been buying bonds knowing it can go to the wild west situation and that this may be an out, and they may be more interested in participating.

No matter what, everyone will be talking to their lawyer.

Everyone wants to know if they could ever end up being sued by participating in this.

You have to be very risky to do this without knowing the legal ramifications.

Who are the parties involved on the investor side?

Bigger houses that have traditionally held bonds and maybe hold them like a benchmark.

Then we have a lot of hedge funds.

We know they have gone on to say -- dan loeb.

Kyle bass has gone on record saying he owns.

There are hedge funds.

The default fonts we have holsinger, mark radke -- marc brodsky that are at the center of this whole dispute.

If you're holding the bonds and will look at a year down the line, are you still going to hold the bonds and waiting for a resolution?

Fax i will, because i think long-term argentina offers a lot.

The capacity to pay is the political situation by which the willingness to pay is not there.

In about 18 months from now we will have a new order.

The new government hopefully will solve the situation.

Most likely it will because when you talk to the presidential candidates, they all talk about the same issues so you know they will come in and solve the situation.

One to thank you both so much.

Another headline today having to

This text has been automatically generated. It may not be 100% accurate.

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change