Hedge funds benefit vultures once again the weakness of government. We alreadytracking this situation when the advance made in Greece in late 2012 had been partly used to pay off these vultures.
This time, it was Argentina who is the victim. These are funds that specialize in the purchase of bonds of these governments in times of crisis and use all means to be redeemed at par value of bonds. This allows them, if successful, to multiply many times their bet.
The restructuring of Argentina’s debt ($ 95 billion) is a major problem for the country’s future. Although it is possible to have mixed opinions about how the Government of Kirchners faced its financial responsibilities, as we have seen in thecase of Repsol YPF nationalization, it is essential to reopen the country’s access to capital markets to develop infrastructure in particular has suffered from an inability to fund its maintenance and development.
92% of the external debt of Argentina is held by a group of lenders federated by the Institute of International Finance. This group recently negotiated a restructuring of Argentina’s debt: this is called a waiver of 70% of the nominal value of the debt of $ 65 billion. An agreement is in sight, but has been blocked by the U.S. courts have ordered the immediate payment of $ 1.5 miliards hedge funds. The situation is compounded by a decision of the Supreme Court of the United States refused to hear the appeal of the Argentine State.
8% represented by the vulture funds are therefore being blackmailed: 100% of nominal or nothing. This typical attitude scavengers block the payment by Argentina 900 million in interest on its debt at the end of the month.