RE: Pressure building..5 Nov 2024 09:16
Cont:
But Argentina has no money to pay. The country’s central bank has negligible hard currency reserves, and it already faces questions about how it will make more than $14bn in sovereign debt repayments due to bondholders and multilateral lenders next year.
Jaime Reusche, vice-president and senior credit officer at Moody’s Investors Services, said the judgments were increasing pressure on Argentina’s limited capacity to make external payments — the main reason Moody’s has yet to upgrade the country’s bottom-of-the-barrel credit rating, despite macroeconomic improvements under Milei.
“There is a 50-50 chance that Argentina’s government can meet its commitments in the next two or three years,” he said. “The outlook is so sensitive that if a couple of variables change, they may need to [renegotiate] debt repayments, and these judgments are a very real contingent liability.”
Argentine officials say they will exhaust legal possibilities to protect the public purse. That goes both for cases without a final ruling and the nearly $2.4bn worth of judgments where the decision may no longer be appealed but enforcement can still be challenged.
“We will exercise our right to protect our assets like any sovereign would,” said one government official. “Nobody relishes keeping litigation open, but we have many demands on our resources, especially given the constraints on the fiscal sector, which the judgment creditors are well aware of.”
Critics of the government argued that statements by Milei, such as a recent post on X that referred to “the illegal expropriation of YPF”, were muddying the waters on that case and may hurt Argentina’s chances of prevailing on appeal.
Plaintiffs in the YPF case have attempted to get Argentina to negotiate a settlement, but the government has not engaged with those efforts.
Those who advocate for Argentina coming to the table say that a drawn-out battle would increase interest bills, while attempted asset seizures would embarrass Argentina, undermining Milei’s effort to attract badly needed foreign investment.
“Kicking the can down the road has never gone well for us, because we almost always lose in these cases,” said Maril, noting that Argentina had already paid out $17bn since 2000 to defaulted bondholders, expropriated shareholders and others.
Marcelo García, Americas director at intelligence firm Horizon Engage, said the litigation has weighed down on investors’ decisions by highlighting Argentina’s severe cash flow problem. But he added that it would be harder than in the past for plaintiffs “to turn Argentina into an international pariah” when Milei is making many reforms demanded by investors.
Claimants who are pushing to be paid quickly should expect a wait, the Argentina government official said.
“It is not always obvious for the private sector how a government deals with these claims. We can’t sacrifice equity in the short ter
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