Some observers speculated that the Argentinean government would agree to settle with the vulture funds after expiration of the RUFO clause. RUFO stands for “right upon future offer” and is inserted in the restructured bonds to promise their holders they will have a right to be offered any better deal that other bondholders receive in the future. If Argentina had settled before the expiration of the clause, it could have faced immediate demands from majority bondholders for payments proportionally equal to those made to NML. But the expiration of the clause in January did not bring any change to Argentina’s offer to the vulture funds. These observers’ speculation failed to recognize that a settlement where NML gets paid the whole amount it demands—even in the absence of the “RUFO effects”—could invite lawsuits from other non-restructured bondholders. In fact, in the wake of the Supreme Court’s ruling last June, some of those bondholders have already filed suit hoping to follow in the footsteps of NML. Since these investors hold claims to some $15 billion, this is hardly an advisable course of action for Argentina.Fermín Koop interviews Kunibert Raffer, an economics professor at the University of Vienna, ‘Griesa thinks the whole world has to obey him’ Buenos Aires Herald 04/26/2015. Raffer has a harsh judgment on Nixon-appointed zombie judge Thomas Griesa's rulings and actions in this case:
Regardless of what happens with Argentina, however, repercussions from Griesa’s decision reach much farther. The ruling continues a trend that, legal experts say, has seen holdouts increasingly better treated by courts, at the expense of the soundness of sovereign debt restructurings. What former IMF economist Anne Krueger characterized in 2003 as a gap in the international financial architecture is now wider than ever. By increasing the potential rewards of holdout behavior, this recent judicial precedent will make future debt crises harder to resolve, with unpredictable systemic consequences. [my emphasis]
This [Griesa's finding of contempt against Argentina and his threats of sanctions against it] represents one of the great breaches of international law. Griesa thinks the whole world has to respond to his court and that’s not the case in international law. He himself cannot sanction Argentina in anyway. His order is of course problematic but in the end he can’t do anything about it. For example, he can ask Argentina to pay US$1 million but he won’t get the money. ...Congress should really look at impeaching judges like this who have very obviously gone off the reservation of the law and by all appearances are senile.
There’s some reason to say he has been biased in the case. His supposed frustration regarding the case shouldn’t be reflected in his rulings. After more than 10 years of serving as a judge in this case, he was unaware of very crucial facts such as that not all bonds had New York jurisdiction. This is scandalous and a denial of the rule of law. If he doesn’t know the fundamental points of the case, he can’t have a fair judgment. I was really shocked about this.
|Nixon zombie judge Thomas Griesa as depicted on the cover of Pagaina/12 Aug. 28, 2014|
But he doesn't think that Singer and the vulture funds will be willing to settle with Argentina:
I don’t think a negotiated solution is possible. On one hand, you have Argentina that isn’t willing to pay more to the “vultures” because of a moral and legal point of view. On the other hand, you have the creditors whose business model is to be paid in full plus the interests. They might settle for 90 percent but they will certainly not settle for less than that. I see it as very unlikely that these two sides can meet. But if Argentina continues selling bonds successfully, the problem is solved.And, in fact, Argentina is able to sell bonds, although they are not attempting to do so on a large scale. The Buenos Aires Herald also reports (Reserves soar as bonds bring relief 04/24/2015):
Successful debt issues are bringing relief to Central Bank coffers, with Tuesday’s US$1.4-billion bond sale boosting reserves by US$1.25 billion to reach US$32.675 billion, the highest level of foreign currency reserves since November 2013.
[State-owned oil and gas company] YPF also received good news from the debt markets yesterday as its planned US$500-million bond sale ended up turning into a US$1.5 billion issuance. The state-controlled oil company received money at slightly better rates than the government, 8.5 percent compared to 8.75 percent, and rejected several bids from a market that seemed eager to invest in the company, having offered US$4 billion overall. ...
Combined with the soybean harvest season, the debt sales have given authorities more room to authorize imports.
“We are increasing the payment of imports significantly, in March they were up 30 percent,” Central Bank chief Alejandro Vanoli said yesterday.