sovereign debt restructurings. the case of … · sovereign debt restructurings. the case of...

SOVEREIGN DEBT RESTRUCTURINGS.THE CASE OF ARGENTINA. AND ITS SYSTEMIC CONSEQUENCES.

ARGENTINA IS NOT ALONE:WIDESPREAD CONCERN REGARDING RULING’S SYSTEMIC CONSEQUENCES

Widespread international supportWidespread international support

Concern regarding ruling's systemic consequencesConcern regarding ruling's systemic consequences

Countries

Brazil

France

Fora

IMF

UNCTAD

Experts

Joseph Stiglitz

Nouriel Roubini

Additional

support

Jubilee USA

Euroclear Bank

3

Mexico

USA

UK (106 MP)

Uruguay

MERCOSUR

UNASUR

CELAC

ALBA

Anne Krueger

Ha-Joon Chang

Mark Weisbrot

Cephas Lumina

Fintech Advisory

The Bank of NY

Mellon

Euro Bondholder

Exchange

Bondholder

Widespread international supportWidespread international support


Countries

Bolivia

Venezuela

Ecuador

Fora

ECLAC

Andean Parliament

G77+China

Experts

José Antonio

Ocampo

Felix Salmon

Additional

support

Clearing House

American Bank

Association

Caja de Valores

4

Ecuador

Cuba

Chile

G77+China

G24

ASA (Africa-South

America

Cooperation Forum)

Bank of the South

Martin Wolf

Martin Khor

Emir Sader

Caja de Valores

Puente Hermanos

Argentine-American

Chamber of

Commerce

International and regional organizations and foraInternational and regional organizations and fora


“[…]“[…] ongoing litigation against Argentina ongoing litigation against Argentina

could have pervasive implications for future could have pervasive implications for future

sovereign debt restructurings.“sovereign debt restructurings.“

IMF IMF (188 countries)(188 countries)06/20/201406/20/2014

“[…] that the “[…] that the behavior of these speculative behavior of these speculative

“[…] The ruling does not only impact the “[…] The ruling does not only impact the

financial service providers involved, it also financial service providers involved, it also

severely erodes sovereign immunity”severely erodes sovereign immunity”

UNCTAD UNCTAD (194 countries)(194 countries)06/25/201406/25/2014

““[…] […] Presidents of the States Parties of Presidents of the States Parties of

5

“[…] that the “[…] that the behavior of these speculative behavior of these speculative

agents does not agents does not […][…] riskrisk the the

globalglobal financialfinancial stability.stability.” ”

UNASUR UNASUR ((12 countries)12 countries)11/30/201211/30/2012

“[…]“[…] we reiterate the importance of not we reiterate the importance of not

allowing vulture funds to paralyze the debtallowing vulture funds to paralyze the debt--

restructuring effortsrestructuring efforts” ”

G77+China G77+China ((133 countries)133 countries)06/15/201406/15/2014

““[…] […] Presidents of the States Parties of Presidents of the States Parties of

MERCOSUR express their absolute rejection of MERCOSUR express their absolute rejection of

the attitude of these Funds.”the attitude of these Funds.”

MERCOSUR MERCOSUR (6 countries)(6 countries)06/21/201406/21/2014

“[…] These speculative funds pose latent and “[…] These speculative funds pose latent and

actual danger to all countries in the world, for actual danger to all countries in the world, for

they attack national economies.”they attack national economies.”

ALBA ALBA (9 countries)(9 countries)06/24/201406/24/2014

International and regional organizations and foraInternational and regional organizations and fora


“[…] this is a test case for the international “[…] this is a test case for the international

community […] which reveals a legal vacuum community […] which reveals a legal vacuum

that should lead to the reform of international that should lead to the reform of international

norms”norms”

ECLAC ECLAC (44 countries)(44 countries)06/26/201406/26/2014

““Consider it essential […] to ensure that Consider it essential […] to ensure that

agreements reached between debtors and agreements reached between debtors and

creditors are respected.” creditors are respected.”

CELACCELAC ((33 countries)33 countries)01/29/201401/29/2014

“[…] “[…] we emphasize the need to limit the we emphasize the need to limit the ““The Andean Parliament declares its full The Andean Parliament declares its full

6

“[…] “[…] we emphasize the need to limit the we emphasize the need to limit the

actions of the vulture funds”actions of the vulture funds”

ASA ASA ((66 countries)66 countries)02/22/201302/22/2013

““The Andean Parliament declares its full The Andean Parliament declares its full

support to its sister republic of Argentina in its support to its sister republic of Argentina in its

dispute with the speculative funds.”dispute with the speculative funds.” Andean Andean Parliament Parliament (4(4 countries)countries)

06/27/201406/27/2014

“[…] “[…] The Bank of the South strongly rejects The Bank of the South strongly rejects

the actions of these minor groups whose the actions of these minor groups whose

attitude […] threatens the financial stability of attitude […] threatens the financial stability of

countries. ”countries. ”

Bank of the South Bank of the South ((7 countries)7 countries)07/02/201407/02/2014


FranceFrance MexicoMexico BrazilBrazil

Amicus curiae Amicus curiae and filings before the U.S. Supreme Courtand filings before the U.S. Supreme Court

Joseph

7

JubileeJubilee USAUSA

Argentine-American

Chamber of CommerceEuroclear BankEuroclear Bank

Euro

Bondholders

Joseph

StiglitzCaja de Valores

Exchange

Bondholder

Group

Fintech

Advisory

Puente

Hermanos

American

Bankers

Association

The

Clearing

House

Additional international supportAdditional international support


“[…] we are at the gates of a financially “[…] we are at the gates of a financially

intensive immoral war.”intensive immoral war.”

Evo Morales Evo Morales

“Starting with the countries of the region, we “Starting with the countries of the region, we

have to invent something to support have to invent something to support

Argentina, providing it with a bumper.”Argentina, providing it with a bumper.”

José MujicaJosé Mujica

8

“[…] “[…] this House […] disagrees with the Court's this House […] disagrees with the Court's

decision to prioritise the greed of vulture decision to prioritise the greed of vulture

funds over the Argentinian people's funds over the Argentinian people's

sovereigntysovereignty””

106 UK 106 UK Members of ParliamentMembers of Parliament06/18/201406/18/2014

Evo Morales Evo Morales 06/23/2014 06/23/2014

““The district court’s interpretation of the The district court’s interpretation of the pari pari

passupassu provision could enable a single creditor provision could enable a single creditor

to thwart the implementation of an to thwart the implementation of an

internationally supported restructuring planinternationally supported restructuring plan””

USA USA (before NY Court of Appeals)(before NY Court of Appeals)

04/04/201204/04/2012

José MujicaJosé Mujica06/22/201406/22/2014

Additional international supportAdditional international support


“[…] we will resist this unfair world order or even “[…] we will resist this unfair world order or even

change it, only joined together […]. This is change it, only joined together […]. This is

shown by the Argentine case.”shown by the Argentine case.”

“We are in the presence of a new form of “We are in the presence of a new form of

aggression against the Southern Nations.”aggression against the Southern Nations.”

Cuba’s Ministry of Foreign AffairsCuba’s Ministry of Foreign Affairs06/27/201406/27/2014

9

“[…] “[…] Argentina [fights] against one of the Argentina [fights] against one of the

most horrid mechanisms of financial most horrid mechanisms of financial

speculation […] The sospeculation […] The so--called vulture fundscalled vulture funds””

Nicolás MaduroNicolás Maduro06/27/201406/27/2014

Rafael CorreaRafael Correa06/24/2014 06/24/2014

06/27/201406/27/2014

““We cannot allow speculative agents to put We cannot allow speculative agents to put

at risk the agreements reached between at risk the agreements reached between

debtors and creditors, affecting global debtors and creditors, affecting global

financial stabilityfinancial stability.”.”

MicheleMichele Bachelet Bachelet 07/01/2014 07/01/2014

Experts and scholarsExperts and scholars


““The recent court rulings […] have very The recent court rulings […] have very

serious consequences that go far beyond serious consequences that go far beyond

Argentina.Argentina.””

Nouriel Roubini Nouriel Roubini 11/28/201211/28/2012

““A recent decision by a US appeals court A recent decision by a US appeals court

““These consequences would be felt by debtor These consequences would be felt by debtor

nations, creditors, the United States, and the nations, creditors, the United States, and the

international economy as a whole.international economy as a whole.” ”

Anne Krueger Anne Krueger 04/01/201304/01/2013

““In the Argentinian case, we are risking not In the Argentinian case, we are risking not

10

““A recent decision by a US appeals court A recent decision by a US appeals court

threatens to upend global sovereign debt threatens to upend global sovereign debt

markets.markets.” ”

Joseph Stiglitz Joseph Stiglitz 09/04/201309/04/2013

““Most experts agree that the appellate court Most experts agree that the appellate court

ruling would have a destabilizing effect on ruling would have a destabilizing effect on

international financial markets.international financial markets.” ”

Mark WeisbrotMark Weisbrot06/22/201406/22/2014

““In the Argentinian case, we are risking not In the Argentinian case, we are risking not

just an end to Argentina's recovery but a fresh just an end to Argentina's recovery but a fresh

round of turmoil in the global financial round of turmoil in the global financial

market.market.””

HaHa--Joon Chang Joon Chang 11/25/201211/25/2012

““Argentina has made important progress in Argentina has made important progress in

improving the social conditions […]. Vulture improving the social conditions […]. Vulture

funds […] must not be allowed to derailfunds […] must not be allowed to derail

that progress.”that progress.”

Cephas Lumina (ONU)Cephas Lumina (ONU)04/02/201404/02/2014

Experts and scholarsExperts and scholars


““The The ruling will make it more difficult for ruling will make it more difficult for

countries to free themselves from the burden countries to free themselves from the burden

of overof over--indebtedness. It will be very bad for indebtedness. It will be very bad for

international capital markets and it will also international capital markets and it will also

diminish national sovereignty.diminish national sovereignty.””

Felix Salmon Felix Salmon

““If Argentina is forced to pay holdouts in full, If Argentina is forced to pay holdouts in full,

the price will be borne by Argentines. This is the price will be borne by Argentines. This is

extortion backed by the US judiciaryextortion backed by the US judiciary..” ”

Martin WolfMartin Wolf06/24/201306/24/2013

11

Felix Salmon Felix Salmon 06/24/201406/24/2014

““Experts agree that the impact will have Experts agree that the impact will have

detrimental effects and not only for detrimental effects and not only for

Argentina.Argentina.” ”

Martin Khor Martin Khor 06/20/201406/20/2014

““The crisis of capitalism, which dates back to The crisis of capitalism, which dates back to

2008, caused a lot of countries to have 2008, caused a lot of countries to have

extremely severe debts to pay; Argentina is extremely severe debts to pay; Argentina is

seen as an example of how to get out of those seen as an example of how to get out of those

situations.situations.””

Emir Sader Emir Sader 06/18/201406/18/2014

CURRENT GLOBAL CRISIS, DEBT

AND RESTRUCTURING PROCESSES

808 847980

1.489

2.658

EMBI+EMBI+

VultureVulture FundsFunds' ClaimClaim

Bonds Bonds IssuanceIssuance at at thethe VergeVerge of of CollapseCollapse

Country Risk

Argentina

Towards the collapse of Convertibility

model, the Risk Premium on Argentine debt

grew exponencially, implying a growing

probabilty of default.

1999 2000

2001

13

686 808

622 552651 671

811 847980

712

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

02-12:

690 bp

02-25:

678 bp

04-07:

690 bp

04-22:

623 bp

11-22:

592 bp

02-01:

541 bp

02-25:

543 bp

03-15:

532 bp

06-15:

715 bp

02-07:

720 bp

02-28:

678 bp

03-30:

758 bp

01-31:

656 bp

06-19:

846 bp

06-19:

1078bp

06-19:

920 bp

04-18:

745 bp

06-20:

866 bp

Bonds Issuance date and

spread over US Treasury :

GrossGross ReturnReturn onon PublicPublic DebtDebt

InvestingInvesting USD 100 USD 100 onon SovereignSovereign DebtDebt in 1976in 1976

USD 100

2001

USD 800

1976

14

USD 800

USD 4,700

2001

FinancializationFinancialization ageage

SovereignSovereign DebtDebt RestructuringRestructuring ProcessProcess

ThereThere isis aa commoncommon historyhistory ofof defaultsdefaults eveneven inin richrich countriescountries.. ThereThere waswas aa significativesignificative

reductionreduction ofof thesethese episodesepisodes inin postpost--warwar eraera butbut,, duringduring thethe actualactual financializationfinancialization ageage,, defaultsdefaults

camecame backback..

SovereignSovereign defaults and defaults and SovereignSovereign DebtDebt

RestructuringsRestructurings

aas % of s % of countriescountries

1802, 1868, 1914,

1932, 1938, 19401935

1828, 1898, 1914, 19

31, 1937, 1961, 1964

, 1983, 1990

1921, 1939

Financialization

15

1850, 1932, 19481958, 1969, 1972

1940

1942-1952

1828, 1833, 1844,

1854, 1867, 1914,

1928, 1982

1841, 1873, 1933

1876, 1915, 1931,

1940, 1959, 1965,

1978, 1982, 2001

1932

1809, 1820, 1824,

1837, 1877, 1936,

1839, 1885, 1917,

1947, 1957, 1991,

1998

300%

350%

400%

WorldWorld debtdebt growthgrowth comparisoncomparison

% % betweenbetween 20022002--20122012DebtDebt growthgrowthArgentinaArgentina isis oneone ofof thethe countriescountries thatthat achievedachieved aa majormajor debtdebt reductionreduction betweenbetween 20022002 andand

20122012.. TheThe DebtDebt/GDP/GDP ratioratio forfor ArgentinaArgentina ratioratio fellfell 7373%%,, whilewhile forfor thethe averageaverage ofof thethe selectedselected

countriescountries therethere waswas anan increaseincrease ofof 3838,,11%%..

GovernmentGovernment grossgross debtdebt% % changechange of of DebtDebt/GDP ratio /GDP ratio

-72,50%-100%

-50%

0%

50%

100%

150%

200%

250%

Luxe

mb

ou

rg

Ire

lan

d

Latv

ia UK

Po

rtu

ga

l

Slo

ven

ia

Un

ite

d S

tate

s

Au

stra

lia

Lith

ua

nia

Spa

in

Gre

cee

Fra

nce

Cze

ch R

ep

Jap

an

Est

on

ia

Ro

ma

nia

Wo

rld

AV

G

Ge

rma

ny

Cyp

rus

Ho

lan

d

Hu

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ary

Po

lan

d

Fin

lan

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ly

Ma

lta

Ch

ina

Au

stri

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Ve

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zue

la

Ca

na

da

Slo

vaki

a

Be

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De

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ark

Me

xico

Swit

zerl

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d

Ind

ia

Bra

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Ch

ile

Swe

de

n

Co

lom

bia

Pa

na

ma

Pe

ru

Ecu

ad

or

Bu

lga

ria

Arg

en

tin

a

EAE La Deuda Pública 2013

WHO ARE THE VULTURE FUNDS?

The vicious circle of vulture fundsThe vicious circle of vulture funds

COUNTRY OVERLEVERAGED AND INSOLVENT

DEFAULT

FUNDS PURCHASE DEBT AT LOW PRICE

18

RESCHEDULING AND DEBT SWAP

MAJORITY ACCEPTANCE

DEBT RELIEF

VULTURE FUNDS

PeruPeruFurtherFurther ExperiencesExperiences

VultureVulture EarningsEarnings

Default 1992Default 1992

RestructuringRestructuring 19951995

1996 NML 1996 NML ElliottElliott buysbuys securitiessecurities inin default.default. 180 eligible creditors, only 2 180 eligible creditors, only 2

litigated.litigated.

Peru loses judicial dispute in the Court of New YorkPeru loses judicial dispute in the Court of New York

NML NML ElliottElliott

19

NML NML ElliottElliott

BoughtBought defaulteddefaultedsecuritiessecurities forfor USD 11,4 USD 11,4 millionsmillions

CollectedCollectedUSD 58,4 USD 58,4 millionsmillions

GainGain of of 400%400%

CongoCongoFurtherFurther ExperiencesExperiences

Elliott bought defaulted titles from Congo for a nominal value of USD 30 Elliott bought defaulted titles from Congo for a nominal value of USD 30

million.million.

ELLIOTTELLIOTT


20

BoughtBought securitiessecurities forfor nearlynearlyUSD 2,6 USD 2,6 millionsmillions

Gets in United Kingdom Gets in United Kingdom judgment for more than judgment for more than USD 100 millions.USD 100 millions.

Seizes oil exports for Seizes oil exports for USD 39 millionsUSD 39 millions

GainGain ofof

1400%1400%

GreeceGreeceFurtherFurther ExperiencesExperiences

2012 Dart buy Greek bonds prior to the restructuring of its debt (March 2012).2012 Dart buy Greek bonds prior to the restructuring of its debt (March 2012).

The restructuring is accepted by 97% of the creditors.The restructuring is accepted by 97% of the creditors.

DARTDART


21

Buy assets amounting close to Buy assets amounting close to €€283 millions.283 millions.

Refuses the Exchange Refuses the Exchange and charge and charge €€435 435 millionSmillionS..

GainGain of of

53,8% 53,8% BetweenBetween MarchMarchand and MayMay 20122012

GriesaGriesa´́ss OrderOrder

A A ThreatThreat to to ArgentinaArgentina´́ss SuccessfulSuccessful DebtDebt RestructuringRestructuring

22

ARGENTINE DEBT HISTORY

Argentine debt historyArgentine debt history

Colapso Convertibilidad (2001/2)

60.000

70.000

80.000

90.000

100.000

80

100

120

Argentine Public Foreign Debt (1824-2002)

Convertibility Collapse (2001/02)

Hyperinflation (1989)

Public Debt Loan

(Sarmiento’s

Debt Restructuring

“Romero’s Settlement”

+ Provincial Debt

Consolidation

18241824--20022002Historical EvolutionHistorical Evolution

24

0

10.000

20.000

30.000

40.000

50.000

60.000

0

20

40

60

18

24

18

69

18

74

18

79

18

84

18

89

18

94

18

99

19

04

19

09

19

14

19

19

19

24

19

29

19

34

19

39

19

44

19

49

19

54

19

59

19

64

19

69

19

74

19

79

19

84

19

89

19

94

19

99

En Mill. de USD (eje derecho) En % del PIB

Debt Crisis (1982)

(Sarmiento’s

Government)

1890 Crisis

In Million USD (Right Axis) % GDP

Foreign Debt and UnemploymentForeign Debt and Unemployment

OverOver indebtednessindebtedness waswas notnot onlyonly anan obstacleobstacle forfor growthgrowth butbut alsoalso expelledexpelled workersworkers fromfrom thethe productiveproductive

systemsystem andand broughtbrought aa drasticdrastic increaseincrease inin unemploymentunemployment.. TheThe unemploymentunemployment raterate remainedremained inin doubledouble

digitsdigits (reaching(reaching levelslevels aboveabove 2020%%)) sincesince thethe earlyearly nineties,nineties, whilewhile foreignforeign debtdebt grewgrew steadilysteadily..

Historical ComparisonHistorical Comparison

20

25

80

90

100

110

120

25(*) 2013: Public Debt until III.13

0

5

10

15

0

10

20

30

40

50

60

70

80

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

Public Foreign Debt - In Millions USD Unemployment - % (Right Axis)

THE 2001 CRISIS AND DEFAULTTHE 2001 CRISIS AND DEFAULT

19941994--20032003TheThe evolutionevolution of of PublicPublic DebtDebt

ConvertibilityConvertibility

ExternalExternal publicpublic debtdebt**

In In millionmillion USDUSD

102.008

95.000

100.000

105.000

TheThe increaseincrease inin publicpublic sectorsector externalexternal debtdebt waswas permanentpermanent.. DuringDuring thethe TequilaTequila crisiscrisis andand

economiceconomic downturndownturn inin 20012001,, therethere werewere majormajor increasesincreases inin publicpublic debtdebt..

27

60.891

81.153

88.02690.492

60.000

65.000

70.000

75.000

80.000

85.000

90.000

95.000

19

94

19

97

III-

98

II-9

9

I-0

0

IV-0

0

III-

01

II-0

2

I-0

3

IV-0

3

Megacanje

Shield

(Blindaje)

** NonNon--financialfinancial NationalNational PublicPublic SectorSector

ConvertibilityConvertibility

2001 Crisis2001 Crisis

ConsequencesConsequences

TheThe collapsecollapse ofof thethe convertibilityconvertibility generatedgenerated recordrecord levelslevels ofof povertypoverty andand unemploymentunemployment..

TheThe worstworst occurredoccurred inin 20022002 when,when, followingfollowing thethe devaluationdevaluation resultingresulting fromfrom thethe currencycurrency

crisis,crisis, GDPGDP fellfell --1010..99%% andand realreal wageswages shrankshrank --1818..66%% inin comparisoncomparison withwith thethe previousprevious yearyear..

GDP and Real GDP and Real wageswages

AnnualAnnual variationvariation

PovertyPoverty and and UnemploymentUnemployment

In %In %

15% 60%

28

-10,9%

-18,6%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

GDP Real wages

55,3%

24,3%

0%

10%

20%

30%

40%

50%

60%

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

Poverty Unemployment

IMF IMF supportsupport to to overindebtnessoverindebtness• RudigerRudiger DornbuschDornbusch,, ProgressProgress ReportReport onon ArgentinaArgentina ((19951995))::

• “In March 1991, following yet another burst of extreme inflation, the country moved

to a radical stabilization. The programprogram waswas centeredcentered onon thethe “convertibility“convertibility planplan..””…So

far, for more than a year, the promises have been kept. TheThe currencycurrency hashas becomebecome strongstrong

inin thethe sensesense thatthat therethere hashas beenbeen aa majormajor rebuildingrebuilding ofof monetarymonetary assetsassets in the form of

peso currency holdings and bank deposits.”

• LetterLetter fromfrom SS.. FischerFischer toto PresidentPresident MenemMenem ((19991999))::

CommentsComments and and opinionsopinions aboutabout thethe ConvertibilityConvertibility

29

• LetterLetter fromfrom SS.. FischerFischer toto PresidentPresident MenemMenem ((19991999))::

•“Under your leadership, Argentina undertook a transformation of truly historical

proportions. This can never be forgotten. “

•“Nor, I hope, (that) you forget that the IMF was honored to be associated (albeit in a

minority) to these remarkable achievements.”

•Regarding poverty and the deterioration of the income distribution, Fischer said that the

report "makes clear that it should be seen as a consequence of rising unemployment due

to the deterioration of the international context since 1995“.

•“In no point our report -he added- suggests that these problems are new to Argentina

or caused by the policies of your administration“.

ARGENTINA’S SOVEREIGN DEBTARGENTINA’S SOVEREIGN DEBT

RESTRUCTURING PROCESS

2005-2010

30

SinceSince 20032003 ArgentinaArgentina hashas facedfaced thethe catastrophiccatastrophic consequencesconsequences ofof thethe decisionsdecisions takentaken byby

previousprevious governmentsgovernments andand successfullysuccessfully normalizednormalized thethe situationsituation.. ItIt achievedachieved thethe highesthighest

growthgrowth periodperiod inin thethe lastlast century,century, andand crucialcrucial stepssteps werewere takentaken toto regularizeregularize ourour externalexternal debtdebt

andand implementimplement aa processprocess ofof debtdebt reductionreduction..

SovereignSovereign debtdebt restructuringrestructuring processprocess

20052005--20142014

2005 March: Debt restructuring with private holders. Level of acceptance: 76%.USD 27.057

millions

2006 March: Early debt cancellation with the IMF. USD 9.500 millions.

31

2006 March: Early debt cancellation with the IMF. USD 9.500 millions.

2008September: Paris’ Club. A decree was released that authorized the payment of the

debt.

2009February: Restructuring of secured loans.

September: Restructuring of the debt with CER adjustment.

USD 600

millions

2010 May: Debt restructuring reopening. Accumulated level of acceptance: +92USD 4.347

millions

2013 October: CIADI. Companies agreement with favorable ruling. USD 677 millions.

2014

March: An agreement with REPSOL is reached for the 51% nationalization of YPF.

USD 5.000 millions

May: An agreement is reached with the 19 countries of the Paris’ Club. USD

9.700 millions

Debt in default:

USD 81.836 millions

2001 2005

Accepted therestructuring:

USD 62.318 millions

2010

Canje de deuda 2010

Accepted the

restructuring:

USD 12.862 millions

MilestonesMilestones


32

2001 2005 2010

Around 92,4% of the debt was normalized

TheThe publicpublic debtdebt toto GDPGDP ratioratio waswas reducedreduced fromfrom 166166%% inin 20022002 toto lessless thanthan 4040%% inin 20132013..

InIn 20022002,, overover 9595%% ofof thethe debtdebt waswas ownedowned byby thethe privateprivate sectorsector andand multilateralmultilateral agenciesagencies..

Today,Today, thatthat percentagepercentage hashas droppeddropped toto lessless thanthan halfhalf..

GrossGross PublicPublic DebtDebt

In % of GDPIn % of GDP

20022002--20132013

1,4

1,6

1,8


33

166%

16%

0

0,2

0,4

0,6

0,8

1

1,2

1,4

2002 2013

40%

Net Debt

�� only

10,8% is

owned by

the private

sector

TheThe debtdebt reductionreduction processprocess waswas achievedachieved becausebecause allall debtdebt covenantscovenants werewere paidpaid byby thisthis

GovernmentGovernment.. SinceSince 20032003 debtdebt paymentspayments werewere donedone byby aboutabout 190190,,000000 millionsmillions ofof dollars,dollars, fromfrom

whichwhich overover 100100,,000000 millionsmillions werewere paidpaid inin foreignforeign currencycurrency..

The GDP-linked swaps

DebtDebt servicesservices, 2003, 2003--2013* 2013*

In USD In USD millionsmillions

20032003--20132013DownpaymentsDownpayments


30.000

34* BCRA is excluded. Debt repurchases are included

The GDP-linked swaps

units issued in 2005

and 2010 generated

USD 9,900 millions

payments between

2006 and 2013.

68

9

1.6

72

4.9

33

6.1

53

7.4

31

9.2

23

13

.12

1

9.9

12

8.5

43

9.3

95

12

.71

88.1

14

8.5

39 9

.48

7

7.2

19

8.1

07

8.0

74

8.2

66

10

.85

7 15

.77

6

11

.86

6

9.0

85

-

5.000

10.000

15.000

20.000

25.000

30.000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

In local currency In foreign currency

SovereignSovereign debtdebt sustainabilitysustainability

SustainabilitySustainability indicatorsindicators

Debt sustainability indicators

Ratios 2002 2013

Interests / GDP 3,8% 1,3%

Interests / Government revenue 21,9% 4,9%

Public Debt / GDP 166,4% 39,4%

Foreign Public Debt / GDP 95,3% 11,8%

35

Foreign Public Debt / GDP 95,3% 11,8%

Foreign Debt / Foreign Reserves 12 times 4 times

Foreign Public Debt / Foreign Reserves 836,2% 198,6%

Foreign Public Debt / Exports 300,6% 62,4%

% of total debt in foreign currency 79,1% 62,3%

Average debt maturity 6,1 years 9 years

ARGENTINA AND VULTURE FUNDS

Date Law Suit Result

October 2009NML and Aurelius attempt to seize USD$ 200 million seize USD$ 200 million

from ANSESfrom ANSESFAILED

July 2010 Creditors try to seize GlobalGlobal BondsBonds ((propertyproperty ofof

Major AttemptsMajor Attempts

Legal actions against ArgentinaLegal actions against Argentina

Attempted Executions and SeizuresAttempted Executions and Seizures

37

July 2010 Creditors try to seize GlobalGlobal BondsBonds ((propertyproperty ofof

Argentina)Argentina) which were deposited in accounts at the

United States

FAILED

April 2011Attempt to seize an Argentine satellite Argentine satellite ARSAT FAILED

May 2011 NML tries to interruptinterrupt aa satellitesatellite launchlaunch in California

manufactured by the CONAE and NASA, to seize parts

of the satellite

FAILED

Date Law Suit Result

June 2011 Action in the Second Circuit to prevent 2010 prevent 2010

RestructuringRestructuringFAILED

July 2010

Major AttemptsMajor Attempts

Legal actions against ArgentinaLegal actions against Argentina

Attempted Executions and SeizuresAttempted Executions and Seizures

38

July 2010 NML and EM attempt to restrict the use of USD$ 105

million of the CentralCentral BankBank internationalinternational reservesreserves

deposited at the Federal Reserve Bank of New York

FAILED

April 2011 Aurelius requests seizures on patents and royalties patents and royalties

from various Argentine agencies FAILED

SeizingSeizing attemptsattempts

Legal Legal actionsactions againstagainst ArgentinaArgentina

39

GRIESA’S ORDER: SEIZING THE GRIESA’S ORDER: SEIZING THE

HOLDINS’ PROPERTY

VultureVulture FundsFunds ClaimClaim

Legal Legal processprocess

45

SeizingSeizing attemptsattempts

Legal Legal actionsactions againstagainst ArgentinaArgentina

FAILEDFAILED

FAILED

46FAILED

FAILED FAILED

FAILED

FAILED

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