Tomahawk, WI 06/17/2014 (Basicsmedia) – YPF SA (ADR) (NYSE:YPF), a renowned Argentine Oil and Gas company, witnessed an avalanche-slide in its stock price on June 16, amidst voluminous trade activities.
Default Notes’ Dilemma
The reason for such steep plunge is a direct impact of the decision of the US Supreme Court to reject Argentina’s demands on defaulted bonds. Axel Kicillof, the Argentine Economy Minister, had negotiated on a payout of $15 billion in order to resolve pending disputes, spanned over the past 4 months. Lately, the US Supreme Court discarded Argentina’s appeal for providing default notes dating back to 2001, to its pay holders, in order to make payments for its restructured debts.
The Argentine government conjectured that if they had to pay back $15 billion in hard cash or other securities to the creditors, then it would affect Argentina’s foreign reserves quite deplorably. The money in Argentina’s foreign reserves had already floundered to nearly an awful eight year low!
Promises Not Kept!
Argentina had been locked out of a myriad of opportunities in the international credit markets, over a decade, resulting in the reserves debunking into grisly, perturbing eight-year-low! The reason for all the disputes revolves around doling out Argentina’s 2001 default bonds. Incidentally, the country had offered similar lower-value substituted default bonds of 2005 in 2010. Eventually, the owners were tendered merely 92% of the outstanding debts.
Bond Yield Plunges To A 2-Year Low!
Last month, Kicillof had brokered a whopping $9.7 billion settlement in order to resolve disputes pertaining to the 2001 default bonds with Paris Club Group. Six months before, the Argentine Economy Minister had negotiated a $5 billion compensation for Repsol SA, pertaining to the seizure of YPF SA (ADR) (NYSE:YPF). These instances had pushed the 2001 bond-yields to a near two-year low, just before the US Supreme Court’s ruling.
Impact On YPF
As the US High Court chose to debunk the Argentine government’s claim, the Argentina’s economic scenario is left reeling in murky waters. This dearly impacted YPF SA (ADR) (NYSE:YPF), as its shares shuddered, dropping down by 11.93%, till the end of trading on June 16.