Argentinean Navy’s Flagship Repossessed!

Tema, Ghana – October 22, 2012 – So what happens when a nation defaults on a $1.6B bond? The same thing that happens to everyone else, except just bigger. The flagship to your navy gets repossessed in a port in Ghana.

The consequences of default were a bit of a shock to Argentina’s President Cristina Kirchner who has subsequently fired both Argentine Navy Admiral Carlos Alberto Paz and the head of Argentina’s Military intelligence.

In what basically amounts to a court-sanctioned repossession, the tall ship was seized as collateral pending Argentina’s payment of its debts to a Cayman Islands-based hedge fund.

The story begins more than ten years ago, when Argentina ran up some $100 billion in debt and then defaulted on it in 2001, which was at the time the biggest sovereign nation default in history. After several years of negotiations with creditors, most of the lenders agreed to accept 30 cents on the dollar in a new bond issuance.
That is most and not all. One hedge fund, NML Capital, is still expecting to collect on the $1.6 billion worth in bonds it bought at fire-sale prices post-default.

NML had sought and received court orders confirming its rights in both the UK and USA., then applied to Ghana to enforce these judgments. Following international law, Ghanaian authorities dutifully impounded the Libertad when it arrived in Tema on a training mission earlier this month. The ship was crewed by some 300 Argentinean sailors who are now cooling their heels in port while everyone waits to see if Argentina will pay the $20 million NML wants to release the boat.

“I wonder what the repo fee was on this? I bet it wasn’t contingent either!” Kevin

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