Readers React: Don’t blame Argentina’s woes on bondholders

To the editor: Referring twice to the minority holders of Argentina’s bonds as “vultures” is outrageous. (“Foreign debt default is unavoidable, Argentine officials say,” June 20)

When Argentina previously faced default and restructured this debt, none of the bondholders was required to accept the 70% haircut demanded by Argentina. The fact that most did doesn’t make the minority holders deserving of this nasty epithet.

In the original bonds, Argentina agreed to be governed by New York law and to submit disputes to resolution in the courts of that state. That is what has happened, and Argentina is dissatisfied with the result. Argentina agreed to a pari passu provision that required that all bondholders be treated equally in the payment of the bonds, including those who elected to stand on their original rights. There was no “drag along” provision requiring holdouts to accept restructuring terms accepted by a supermajority of the holders.

Argentina does not believe in the rule of law and the reasonable enforcement of contracts. Fiscal irresponsibility by a succession of Argentine governments led to the present crisis, not the actions of bondholders.

Wilburn Smith III, Laguna Niguel