Argentina cannot turn its back on negotiations with holdout creditors after defaulting on its sovereign debt, a US judge instructed on Friday, just as the country’s failure to service a June interest payment was declared a “credit event.”
US District Judge Thomas Griesa in New York slammed the decision by Latin America’s third-biggest economy to defy his order that it pay in full the holdout investors suing it instead of defaulting on its US$29 billion debt.
As Griesa was speaking, a 15-member committee facilitated by the International Swaps and Derivatives Association (ISDA) voted unanimously to call the missed coupon payment a “credit event.” The move triggers a payout process for holders of insurance on Argentine debt, which analysts estimate could amount to roughly US$1 billion.
“Nothing that has happened this week has removed the necessity of working out a settlement,” Griesa said. He chided Argentina for making public statements he characterized as misleading. “The debts weren’t extinguished. There’s no bankruptcy, no insolvency proceedings... The debts are still there.”
The veteran judge has been at the center of Argentina’s drawn-out fight against the New York hedge funds suing it for full payment on bonds they bought cheaply following the country’s record 2002 default on its US$100 billion debt.
Argentine bond prices slightly extended earlier losses after Griesa’s comments.
The Buenos Aires Stock Exchange Merval Index pared earlier losses to trade down just 0.6 percent from Thursday’s close at 8,150.91. The Argentine peso traded slightly weaker on the black market at 12.7 pesos per US dollar.
Griesa told both sides to continue working with mediator Daniel Pollack, a lawyer one senior Argentine government minister had dubbed “incompetent” a day earlier.
Argentina’s lead lawyer told the judge the Buenos Aires government had no confidence in Pollack after he released a statement after negotiations broke down saying the case had become “highly politicized.”
“The Republic of Argentina believes ... it was harmful and prejudiced to the republic and the impact on the market,” lawyer Jonathan Blackman said in an exchange that prompted Griesa to tell the hearing that everyone should “cool down” about ideas of mistrust.
The Argentine government says it has not defaulted because it made a required interest payment to a bank intermediary on one of its bonds. However, Griesa blocked that deposit in June, saying it violated his ruling that Argentina settle its dispute with holdout investors first.
As a result, holders of exchanged Argentine bonds did not receive the interest coupon payment by the July 30 deadline.
On Friday, the ISDA-facilitated Determinations Committee declared that a “failure to pay” event had happened. It will now hold an auction to settle outstanding credit default swap (CDS) transactions.
CDS reaction was muted as the market waited for ISDA’s auction process to start and investment accounts were hesitant to take positions.
“The amounts are not very large. We estimate the amount of CDS outstanding for Argentina at about US$1 billion; it’s not something that’s going to systemically affect financial markets,” said Jorge Mariscal, emerging markets chief investment officer at UBS Wealth Management.
Before Friday’s hearing, the Argentine government had said it expected nothing favorable to come from Griesa. It had previously called the federal judge an “agent” of the New York hedge funds.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
FUTURE PLANS: Although the electric vehicle market is getting more competitive, Hon Hai would stick to its goal of seizing a 5 percent share globally, Young Liu said Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler and supplier of artificial intelligence (AI) servers powered by Nvidia Corp’s chips, yesterday said it has introduced a rotating chief executive structure as part of the company’s efforts to cultivate future leaders and to enhance corporate governance. The 50-year-old contract electronics maker reported sizable revenue of NT$6.16 trillion (US$189.67 billion) last year. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), has been under the control of one man almost since its inception. A rotating CEO system is a rarity among Taiwanese businesses. Hon Hai has given leaders of the company’s six