Argentina to Ghana: You’re Not Keeping Our Tall Ship

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October 3, 2012

The ship in question is the ARA Libertad, a tall ship used for training by the Argentine Navy.

(Bloomberg) — Argentina’s Foreign Ministry accused a Ghanaian court of violating rules of diplomatic immunity after it blocked an Argentine naval training ship from leaving one of the African nation’s ports.

The ruling, in response to a petition from NML Capital Ltd., an investment fund that owns Argentina’s defaulted bonds, has been challenged by the South American nation’s government, the ministry said in an e-mail statement today.

Argentina won’t give in to “attempts at international and local extortion by vulture funds,” the ministry said.

NML and other holders of bonds that weren’t swapped in two restructurings of the $95 billion of debt on which Argentina defaulted in late 2001, are seeking to recover the full value of the securities. About 94 percent of the defaulted bonds were restructured in 2005 and 2010, giving creditors about 30 cents on the dollar.

The action against the ARA Libertad tall ship in Ghana follows attempts by holders of defaulted bonds to seize Argentine government assets, from aircraft owned by flagship airline Aerolineas Argentinas to central bank funds deposited in banks in New York.

Bondholders are also waiting for a federal appeals court to rule on a decision from a U.S. district court that a so-called pari passu clause in the defaulted bonds bars Argentina from paying investors who participated in the 2005 and 2010 restructurings before it pays the holdouts. The appeals court heard arguments in July.

Debt Risk

Argentina hasn’t sold debt in global credit markets since its default.

The extra yield investors demand to hold Argentine government dollar bonds instead of Treasuries fell 9 basis points to 873 basis points today, according to data compiled by JPMorgan Chase & Co.’s EMBIG index, the highest in South America after Venezuela.

Peter Truell, a spokesman for Elliott Management Corp., the hedge fund founded by billionaire investor Paul Singer that runs NML, declined to comment on the Ghana court decision.

The Libertad, built in 1956, left Buenos Aires on June 2 with more than 300 people on board. The vessel was scheduled to call at ports in Brazil, Suriname, Guyana, Venezuela, Portugal, Spain, Morocco, Senegal and other countries. From Ghana, it was due to sail for Angola, according to a press statement by the navy.

-By Eliana Raszewski. Copyright 2012 Bloomberg.

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