Saturday, August 2, 2014
Argentina rating cut to 'selective default' by S&P (Market Watch)
Standard & Poor's Ratings Services cut the credit rating on Argentina's foreign currency bonds to "selective default" on Wednesday due to nonpayment.
Argentina's failure to pay its debts sent ripples through financial markets Friday as its bonds fell for a second day and an industry group ruled investors can collect on insurance that protects against a default.
This was the country’s political machine in overdrive after last-ditch mediated talks to avert a default broke down in New York. Argentina has been battling a group of hedge funds — so-called holdouts — who sued the country for a full payment of $1.5 billion on bonds that Argentina defaulted on in 2001. [image of Paul Singer via Wikimedia Commons from WEF]
Argentina’s predicament has arisen from a ruling by a federal judge in the United States that it could not make its regular payments on bonds without also paying the hedge fund holdouts.
See U.S. Supreme Court decision on Scotus Blog Republic of Argentina v. NML Capital
Holding: The Foreign Sovereign Immunities Act of 1976 does not provide a foreign-sovereign judgment debtor with immunity from post-judgment discovery of information concerning its extraterritorial assets.
Judgment: Affirmed, 7-1, in an opinion by Justice Scalia on June 16, 2014.
See 2nd Cir. Court Appeals decision here
See Scotus Blog - The Argentine bond saga, made simple