Fitch downgrades Argentina’s credit rating fearing ‘probable default’

[ProgressiveProfessor]

The agency stated in a communiqué that “the increased probability that Argentina will not service its restructured debt securities issued under New York law on a timely basis reflects US District Judge Griesa's decision on Nov. 21 to remove the stay order on the ruling that Argentina must pay 1.33 billion dollars to holdout investors concurrent with or prior to its payments due to holders of the 2005 and 2010 restructured debt.”

Fitch assured that a missed payment could lead to a “cross default on all exchanged debt securities issued under international law.”

“A missed coupon payment of any other external securities would also trigger a cross default on all exchanged bonds issued under international law,” it continued.

More at: http://en.mercopress.com/2012/11/28/fitch-downgrades-argentina-s-credit-rating-fearing-probable-default?utm_source=newsletter&utm_medium=email&utm_campaign=daily

A bit more data here: http://edition.cnn.com/2012/11/27/business/argentina-debt-order/index.html?iref=allsearch
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The indeed seems to be a correlation between Argentina's economic woes and the more whining it does about the Falklands. Fortunately they have no paper case and Ban Ki Moon has come out strongly for self determination.

In a rational nation, the currently leadership would be out of office. With Argentina, you can never tell.

[Bacchus4.0]

1. Argentina is sovereign and doesn't have to obey the order

I couldn't resist.

my understanding though is that Argentina will lose much more if they default than the 1.33 billion they owe but I guess its the principle of the thing they are fighting and damn the consequences.

It will be interesting to see if the Falklands issue is now going to heat up again. It will at some point as the Falklanders are going to have a referendum in 2013.

[ProgressiveProfessor]

2. Actually Argentina agreed to the venue so they are bound in the eyes of international finance

While the public fight is with those who refused to renegotiate, there is additional reckoning coming in the near term for even the renegotiated bonds. Argentina has once again mismanaged itself into a corner.

Falklands has been heating up for the last year or so. It sure seems to be the favorite distraction of any number Argentine governments. The more trouble they have, the more noise they make.

Argentina will lose and therefore ignore the Falklands plebiscite.

[Bacchus4.0]

3. I believe a US bank controls the payments to the creditors

so the bank would be bound by the ruling.

yes, the Falklanders don't matter to Argentina. They would be more than happy to ship them away.