US Supreme Court rejects Argentine Case

ARGENTINA - In Brief 16 Jun 2014 by Esteban Fernandez Medrano

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Without further consultations, the US Supreme Court announced today that it will not consider Argentina’s appeal against the rulings of judge Griesa in favor of Holdouts. Even though Argentina is expected to request a rehearing of the case, the chances that the Supreme Court changes its mind are perceived as being practically nil. With this decision, once the rehearing is rejected Griesas ruling will become firm, and therefore the current “stay” order will be lifted (which local press estimate will happen in 30 days). The timing question is relevant because at the end of the month Argentina has to make a coupon payment of the Discount bonds, in the order of USD 907mn, out of which USD 445mn correspond to the USD denominated instruments, out of which again, USD 228mn are issued under US law. But even if the government managed to overcome this deadline, the end of September is has to pay USD 67nm of coupons of Par bonds under US law, and at the end of the year it owes a similar amount for Discounts as at the end of this month (the GDP warrant will not be paid as 2013 GDP was revised downwards). Griesa’s ruling prohibits Argentina to pay restructured bond holders before honoring in full its obligations to Holdouts (valued also according to a prior court ruling). Such prohibition involves also the US financial system, such as the intermediate banks which participate in the clearing process. Assuming that the “stay” remains in place at least until the end of month, the next question is how Argentina is going to prepare itself for the upcoming debt payments in September. One option would be simply to pay holdouts, continuing with its recent efforts to normalize its stance wi...