Argentina: An Open Letter to Finance Minister Kicillof

by Elliott Morss, 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.

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.