News Center

Japanese bondholders file lawsuit
La Nacion
July 01, 2009

They will demand US$111 million in the courts of their country for unpaid bonds since the end of 2001

Mart n Kaneguiser
LA NACION

Nobody could accuse the Japanese bondholders of being impatient: almost eight years after the default and four years since the swap, only now begins a lawsuit against Argentina for US$111 million that they couldn't voluntarily collect on.

The Japanese investors launched legal action in the court of Tokyo soon after "several months" of holding talks with Argentine officials to see if they could arrive at a "friendly" solution, according to what sources close to the case told LA NACION.

"There were talks with important officials of the government, but they always ended at the same dead end, because there is a law that prohibits arriving at any accord without the approval of Congress," sources explained.

In fact, when the government wanted to launch a global accord with the bondholders in default in the middle of last year, which came to nothing for the closing of the markets to the country, it proposed a formula in which the first term was that investors come forward "by their own free will" with their bonds in order to swap them.

But the arguments of the Japanese banks Mitsubishi, Shinsei and Mizuho fiduciary representatives of the bondholders of that country is that in the coming months the legal deadlines for filing suits against Argentina over the default, which began at the end of 2001 and which closed partially in 2005, will expire.

"We asked the Republic to pay its capital in a voluntary form. Unfortunately, the Republic has not responded," said the financial entities in a statement reprinted in the Japanese daily Nikkei.

The suit is for a total of 10.7 billion yes (some US$111 million) for Samurai bonds, which were sold during the governments of Carlos Menem and Fernando de la R a (between 1996 and 2000), "tailored" for investors in that country.

Despite the swap that was developed by the government of Nestor Kirchner from the team lead by Minister Roberto Lavagna, which had an acceptance rate of over 90% in Japanese territory the largest of any country abroad those who didn't enter that operation still demand their unpaid debts from Argentina.

This way, Japan joins the judicial front that the government has already faced in the United States there are embargoes over Central Bank and Banco Hipotecario funds in Germany businesses with branches here were asked not to pay taxes and in France, where the firm of Manseau Associ s managed at least through the end of August to freeze diplomatic funds at the request of the aggressive investment fund NML-Elliot.

The officials charged with financial strategies recognize that the situation will be complicated if in the coming month the offer is not refloated to resolve the problem, above all because beginning December 10th, approval in Congress for an end to the lockbox law will be more complicated for the government.

Funds from the IDB

The good news for the day in the government was from the Interamerican Development Bank (IDB), whose leadership yesterday approved a loan of US$850 million for social programs, with particular emphasis on the Families Program. Economy Minister Carlos Fernandez pointed out in a statement the importance of this credit in "strengthening anti-cyclical government policies and managing to have the net flow of funds between Argentina and the IDB return to the black for the country in 2009."

Fern ndez will participate tomorrow in a ministerial meeting of the IDB in Santiago de Chile, where he will seek to move ahead on the process of approval in the increase of available funds for all countries in the region, which the government is supporting with added zeal.

U.S. Government
Takes Action

Click here to view letters by the Administration and Members of Congress on Argentina's debt and economic policies.

The Debt and Europe

Click Here To Read More

ATFA Member Spotlight

National Taxpayer's Union

Open Letter to the U.S. House of Representatives: Protect Taxpayers from Judgment-Evading Nations

Click here to view other ATFA member activity

Join Us
Show your support for ATFA and our work regarding debt default by joining our growing list of supporters.

Tell Your Friends
Do you have friends or colleagues who would be interested in supporting ATFA? Send them an invitation to this site by clicking here.