Page 11 - atoday
P. 11
WORLD NEWS A11
Tuesday 13 October 2015
Debt spat thorny issue for Argentine presidential candidates
PETER PRENGAMAN lysts say. Argentina has Argentina’s President Cristina Fernandez flashes a victory In the last two years, Ar-
Associated Press about $27 billion in foreign sign during a ceremony at the government house in Buenos gentina has signed sev-
BUENOS AIRES, Argentina reserves, relatively low for Aires, Argentina. The dispute between creditors and President eral agreements with the
(AP) — Like a dark cloud, such a large economy in Fernandez, who has refused to pay the $1.5 billion owed Asian powerhouse, includ-
the bitter fight between which the government of- to hedge funds she refers to as “vultures” is preventing the ing multibillion-dollar infra-
Argentina and a group fers generous subsidies. country from accessing international credit markets. structure projects and a
of holdout creditors in the The governing party’s pres- currency swap.
U.S. has hung over South idential candidate, Daniel (AP Photo/Natacha Pisarenko) Fernandez has touted
America’s second largest Scioli, governor of Buenos the deals, but the terms
economy for years, pre- Aires province who leads stakes, such as recently rulings. have never been made
venting the country from in the polls, has taken up opening the door for Ar- Largely cut off from inter- public, and analysts have
accessing international Fernandez’s hard line, yet gentine assets in the U.S. to national loans, Argentina little doubt China exacts
credit markets. he is also promising to find be seized. Economy Min- has turned to countries a price far more than the
The dispute pits creditors a solution. Economists on ister Axel Kiciloff accuses such as China for back- roughly 3 percent interest
led by U.S. billionaire Paul his team have made clear Griesa of overstepping, door ways to get desper- rate currently available in
Singer against Argentine that Argentina will have and Argentina ignores the ately needed financing. international loan markets.
President Cristina Fernan- problems raising money “It’s the equivalent of
dez, who has refused to until the dispute is settled. somebody going for a
pay the $1.5 billion owed His main opponent, out- payday loan,” said Brett
to hedge funds she refers going Buenos Aires Mayor House, a former IMF econ-
to as “vultures.” A U.S. dis- Mauricio Macri, has vowed omist who is chief econo-
trict judge’s rulings in favor to negotiate a resolution. mist at Alignvest Invest-
of the hedge funds have While the candidates re- ment Management, a
put Argentina in default, main vague, there are sev- Toronto-based investment
scaring off would-be inves- eral ways the spat could firm. “Argentina is mort-
tors and forcing the coun- be resolved. As part of a gaging the future” with
try to search for money in deal, Argentina could get such deals.q
unorthodox places. loans on preferential terms
For Fernandez, who along to pay creditors off in lump
with her late husband and sums. The country could
predecessor Nestor Kirch- also simply reissue the debt
ner helped lead the coun- with new bonds at higher
try after a devastating fi- rates.
nancial crash in 2001, the Still, many Argentines
issue has been a deeply believe the country has
personal fight and she has been unfairly picked on,
taken a tough approach, which means candidates
including a refusal to even have to talk tough when
engage in talks over the it comes to the holdouts,
last year. notes Roberto Bacman, di-
But many people think rector of the South Ameri-
her successor being cho- can research firm Center
sen in the Oct. 25 presi- for Public Opinion Studies.
dential election will feel The dispute goes back to
compelled to resolve the Argentina’s $100 billion
standoff. default on its debts in late
“There are big incentives 2001. In 2005, and then
for the next president to again in 2010, most of the
resolve this because the country’s creditors ac-
government needs for- cepted lower-yield bond
eign funding,” said Gabriel swaps. But a group led
Torres, a senior credit of- by Elliot Management re-
ficer for Moody’s Investor fused and sued Argentina
Services in New York. “For in New York federal court.
years, it’s been clear that Elliot officials declined to
deep down the current comment on the conflict.
administration didn’t care A familiar pattern has sub-
about this.” sequently emerged: U.S.
A cash crunch would be District Judge Thomas P.
the biggest prod for clear- Griesa rules against Ar-
ing up the conflict, ana- gentina, often raising the
