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Argentina's Defaulted Debt Owners Run Newspaper Ad
Bloomberg
April 11, 2007

By Bill Faries

The American Task Force Argentina, a group representing holders of defaulted Argentine debt, ran an advertisement in today's Wall Street Journal accusing the country's government of a ``South American Swindle.''

``Argentina is teaching a new kind of math,'' says the ad, which shows teachers leaning against chalkboards. ``Even though Argentina can afford to honor its foreign debts, in 2005 President Nestor Kirchner repudiated $20 billion owed to global debt holders.''

Argentina restructured about $104 billion in debt in 2005, paying investors who accepted its offer about 30 cents on the dollar. Bondholders with $20 billion in the defaulted debt, or almost 25 percent of the total, refused the deal. Economy Minister Felisa Miceli said March 19 that the government has no plans to reopen the debt restructuring.

The advertisement appeared the day before Miceli will be in Washington ahead of the annual meetings of the International Monetary Fund and World Bank. Holders of the defaulted debt are stepping up pressure for new talks as Argentina tries to restructure $6.3 billion in loans from the Paris Club.

Argentina's Kirchner says the country won't make another offer to holdouts. ``Enter now or it will be your problem,'' Kirchner told investors in a speech in January 2005. Days later, he pushed a bill through congress that blocks the government from making a second offer to creditors.

`Harsh Lesson'

U.S. Congressmen Eliot Engel and Dan Burton, senior members of the House Committee on Foreign Affairs, asked U.S. Treasury Secretary Henry Paulson in a Feb. 28 letter to encourage Argentina to open negotiations with outstanding bondholders.

The Teachers Insurance and Annuity Association of America, known as TIAA-CREF, filed a $100 million lawsuit against Argentina last year saying the country violated the terms of its bonds when it defaulted and then stopped making payments on its bonds in late 2001. The suit is among more than 100 filed against Argentina by bondholders who rejected the country's restructuring offer, according to the advertisement.

``America's teachers have learned a harsh lesson in international economics -- thanks to Argentina's unprecedented debt default,'' the ad, which takes up about half of the newspaper's B5F page, says.

Argentina's presidential spokesman Miguel Nunez didn't return a message left at his office seeking comment.

To contact the reporter on this story: Bill Faries in Buenos Aires at wfaries@bloomberg.net .

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