Argentina: An Open Letter to Finance Minister Kicillof

August 1st, 2014
in Op Ed

by , Morss Global Finance

Minister Kicillof:

You got caught is a squeeze by your "equal treatment" (RUFO) clause and an overreaching US judge. So you have now not paid any of your debtors on an agreed-upon so you are legally in default. And sadly, this was done at a time it appears your country wants to "rejoin" the global financial community.

Follow up:

On a more positive note, there is some sympathy for you:

  • Some blame what happened on the so-called vultures;
  • Some understand that you were blocked by your RUFO clause, and
  • Some blame this on an overreaching American judge.

In this circumstance, I recommend that you do the following:

  1. Inform all creditors that you will offer new terms that approximate the 2010 settlement later this year;
  2. Indicate that the new terms will not include a RUFO clause but instead a clause saying that all creditors will be required to accept the new terms once 60% of creditors have accepted them;
  3. Indicate that to avoid the US judge's rulings, you cannot do anything until the RUFO clause in the defaulted debt agreements expires at the end of 2014;
  4. Reaffirm your intention to continue to pay the Paris Club creditors on the agreed-upon terms.

Taking these steps should mitigate disruptions and further your re-entry into the global financial community.

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