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Obama's legislators ask for a law to block Argentina from emitting debt in the United States
El Cronista
May 21, 2009

The bill proposes that countries with defaults lasting more than two years and for amounts above US$100 million cannot place bonds in the U.S. market

JUAN CERRUTI Buenos Aires

A group of Democratic legislators is pushing a law that would impede debtor nations in non-compliance with paying their obligations to access the United States capital markets, the main one in the world for the volume of its operations. The move would leave Argentina without a chance of emitting bonds in that market, due to the fact that the country has many lawsuits pending against it in the New York courts (pending before Judge Thomas Griesa) over the debt default that came together at the beginning of 2002.

The proposal is being pushed by one of the main groups of creditors that didn't accept the 2005 swap, American Task Force Argentina (ATFA), an entity that has already created a lot of headaches for the government of Cristina Fern ndez de Kirchner.

The bill was introduced by members of the governing party of Barack Obama, which gives it more momentum. Eric Massa a Democratic representative of New York and an official who lived for many years in Argentina is the chief sponsor, along with six other legislators. They are Paul Tonko, Timothy Bishop, Carolyn Maloney, Dan Maffei and Mike McMahon (all from New York) and Robert Wexler (of Florida).

The so-called "Judgment Evading Foreign States Accountability Act" seeks to prohibit access to the U.S. markets for any country that has been in non-compliance with court rulings that such country owes for amounts above US$100 million for more than two years.

After hearing the news, ATFA issued a statement in which it welcomed the legislative move. "The legislation will also demand that the government of the United States take into consideration the state of non-compliance of those countries before giving them aid. Argentina is refusing to recognize billions of dollars in verdicts from U.S. courts, which not only harms U.S. citizens but also Argentine citizens," said Robert Raben, executive director of ATFA, yesterday. "U.S. taxpayers are continuing to wait to have the money they lent to Argentina in good faith paid back. At the same time, Argentina has earned the reputation of being a defaulter because its government doesn't comply with judicial decisions. This legislation could clear the way for a just resolution for both countries," Raben said.

Default

Argentina renegotiated its debt in default at the beginning of 2005, for around US$100 billion. The government managed an adhesion of 76%, but from that point the so-called holdouts (those that didn't accept the proposal) began to sue in courts around the world for the unpaid debts that according to official calculations have come to around US$30 billion in bonds.

Strictly speaking, Argentina today anyway cannot emit debt in the markets of the United States due to the risk of embargoes on the part of creditors. But if the bill by the Democratic congressmembers goes through, this impediment would rise to the level of law.

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