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.
CHIP RACE: Three years of overbroad export controls drove foreign competitors to pursue their own AI chips, and ‘cost US taxpayers billions of dollars,’ Nvidia said China has figured out the US strategy for allowing it to buy Nvidia Corp’s H200s and is rejecting the artificial intelligence (AI) chip in favor of domestically developed semiconductors, White House AI adviser David Sacks said, citing news reports. US President Donald Trump on Monday said that he would allow shipments of Nvidia’s H200 chips to China, part of an administration effort backed by Sacks to challenge Chinese tech champions such as Huawei Technologies Co (華為) by bringing US competition to their home market. On Friday, Sacks signaled that he was uncertain about whether that approach would work. “They’re rejecting our chips,” Sacks
NATIONAL SECURITY: Intel’s testing of ACM tools despite US government control ‘highlights egregious gaps in US technology protection policies,’ a former official said Chipmaker Intel Corp has tested chipmaking tools this year from a toolmaker with deep roots in China and two overseas units that were targeted by US sanctions, according to two sources with direct knowledge of the matter. Intel, which fended off calls for its CEO’s resignation from US President Donald Trump in August over his alleged ties to China, got the tools from ACM Research Inc, a Fremont, California-based producer of chipmaking equipment. Two of ACM’s units, based in Shanghai and South Korea, were among a number of firms barred last year from receiving US technology over claims they have
Taiwan’s exports soared 56 percent year-on-year to an all-time high of US$64.05 billion last month, propelled by surging global demand for artificial intelligence (AI), high-performance computing and cloud service infrastructure, the Ministry of Finance said yesterday. Department of Statistics Director-General Beatrice Tsai (蔡美娜) called the figure an unexpected upside surprise, citing a wave of technology orders from overseas customers alongside the usual year-end shopping season for technology products. Growth is likely to remain strong this month, she said, projecting a 40 percent to 45 percent expansion on an annual basis. The outperformance could prompt the Directorate-General of Budget, Accounting and
BARRIERS: Gudeng’s chairman said it was unlikely that the US could replicate Taiwan’s science parks in Arizona, given its strict immigration policies and cultural differences Gudeng Precision Industrial Co (家登), which supplies wafer pods to the world’s major semiconductor firms, yesterday said it is in no rush to set up production in the US due to high costs. The company supplies its customers through a warehouse in Arizona jointly operated by TSS Holdings Ltd (德鑫控股), a joint holding of Gudeng and 17 Taiwanese firms in the semiconductor supply chain, including specialty plastic compounds producer Nytex Composites Co (耐特) and automated material handling system supplier Symtek Automation Asia Co (迅得). While the company has long been exploring the feasibility of setting up production in the US to address
RSS