Argentina Applies for Loan to Settle $677 Million Arbitration Payout with Bonds
Tuesday, October, 22, 2013
Five companies in Argentina won arbitration awards in investment disputes with the country; now, the nation is asking the World Bank to approve $3 billion in loans to pay the companies, which agreed to accept payment in the form of bonds while also reducing the principal amount of the awards by 25%.
The World Bank’s arbitration court has seen more cases against Argentina than any other nation, as investors and utility companies within the country have filed cases related to their losses in the face of Argentinian currency devaluations. Nationalization of entities, along with freezes in rates, is related to Argentina’s $95 billion default that occurred in 2001.
According to a spokesperson for Argentina’s Economy Ministry, “The agreements with the companies that had obtained firm rulings, which allow for the normalization of $677 million of debt, were obtained in extremely favorable conditions for the country. The Republic won’t be using cash or international reserves” to complete the payment.
Some of the companies involved in the arbitration included Blue Ridge Investments LLC, which owned rights to CMS Gas Transmission Company claims; and CC-WB Holdings LLC, which owned rights to Continental Casualty Company claims.
There has been no official word on whether the World Bank will approve the loan requested. However, demand for Argentine bonds in place of U.S. Treasuries fell by 49 basis points, or .49 percent, according to JPMorgan Chase & Co.’s EMBI Global Diversified index.