U.S. District Court Judge Thomas Griesa sanctioned Argentina this week for ignoring a 2013 court order requesting information about it assets, according to an article from The Wall Street Journal on Wednesday (Aug. 12).
For more than a decade, a group of hedge funds, led by NML Capital Ltd. and Aurelius Capital Management Ltd., has tried to collect $1.8 billion on defaulted bonds from the country. The bonds fall under U.S. law, which is why a U.S. judge has imposed this decision, explained Ron Shepherd, director of business, development and membership for FCIB (The Association of Finance, Credit & International Business). Griesa’s ruling states that any Argentinean possessions in the U.S., with the exception of military or diplomatic holdings, are considered commercial property and can be seized.
“It’s not a typical kind of sanction, like in Russia or Iran,” Shepherd said. “In essence, this judge is saying, ‘any assets that Argentina has in the U.S. can be seized to repay the holdout bondholders.”
The ruling is a continuation of what has been occurring for the last 14 years, noted Shepherd, who added the judge’s decision really won’t impact the risks of doing business with Argentina. While “the saga continues,” Shepherd is curious about Argentina’s next step. “The country is already in default and already blocked from raising capital in the foreign debt markets,” he said. “The damage has already been done in terms of its ability to right its ship and fund its government. It has shut itself out of being able to do that.”
- Jennifer Lehman, NACM marketing and communications associate
For more on Argentina, check out this week’s eNews, which provides a link to the newly released Country Report on Argentina from Euler Hermes.