That’s the gist of the latest from Judge Thomas P. Griesa…
On Wednesday the District Court judge ordered Deutsche and JPMorgan to turf over documents on the “flow of funds” relating to an unofficial, $2bn sale they were arranging of US dollar-denominated — although not US-law — bonds (Bonars) issued by Argentina.
The deadline had just passed at pixel time, but Argentina has already cancelled the sale.
Which is interesting, because the bonds were after all a domestic-law bond issue, being targeted moreover at non-US investors through London. In other words the sale seems to have specifically been designed to avoid running into the embargo on Argentina’s broader international bonds which has emerged from the pari passu saga.
The embargo has been working very well at ensuring no one gets paid by Argentina, less well so far at getting the holdouts paid. Argentine bonds — holdout or restructured — are still pricing in negotiations on a settlement at some point (they’re nearly par assets!) which arguably makes all this litigation even odder than usual. But one way to keep up the pressure is to stop Argentina refinancing any US dollar debt internationally.
As the Bonar flop shows, it may just be working.
Although by bringing local-law bonds increasingly into the embargo — there’s also aninterminable dispute going on in Judge Griesa’s courthouse regarding payments handled by Citibank on local-law restructured debt — it should be revealing to the bond market just how wide a US judge’s reach can be. And the longer the saga goes on without that deal, the more that seems to be a theme.
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