The U.S. Second Circuit Court of Appeals will soon hear arguments in a legal battle that has been described in the media as “the landmark sovereign debt default case of the century”: NML v. Argentina. The court will determine — once and for all — whether Cristina Kirchner’s government must honor its promises to “international creditors,” i.e., the institutional holdout investors. The case, it is said, will set “an important legal precedent,” upon which might rest the future of the secondary debt market.
These are all true statements, and speak to why this case has earned the attention of the world. But, in my kitchen in Buenos Aires — and in tens of thousands of homes across Argentina, Europe, and North America — individual holdout investors like myself also await judgment. We look forward to the day that justice will be done; that our dignity — and our savings — will be restored; that 12 years of government stonewalling will have come to an end, and with them, perhaps, the suffering of those who have been held captive to our government’s refusal to honor its obligations to its citizens.
When Argentina announced its historic $81 billion default in 2001, I had owned bonds for more than two years. I was 64 years old, in good health, and recently retired after 42 years as a bilingual secretary with a foreign company. Without a spouse, with no children, I planned on applying the savings from four decades of hard work to the care and comfort of my mother and to my own retirement needs.
Given the size of my investment in Argentine bonds — the entirety of my family’s savings — these were perfectly reasonable expectations.
My life had never been one of luxury. I had earned a good and comfortable salary, as well as the contentment that only comes from honest work. I obeyed the law, paid taxes, and saved as much as I could. I was a responsible middle-aged woman — well-schooled in “deferred gratification” — focused on providing for myself and for my family with the fruits of our labor.
After 42 years of hard work and strict budgets, I owned my own apartment. I was debt-free. I was proud, and justifiably so. And, I was secure in my future, and in the knowledge that I could return to my parents some of the love and care they had given to me throughout my life.
For years after the default, when times were very difficult for the country, Argentina refused even to acknowledge its debt. It stonewalled not only bondholders large and small outside of Argentina, but also the many Argentine pensioners like me and my mother.
Then, in 2005, with the economy back on track, it issued a take-it-or-leave-it offer to sovereign bondholders that for us amounted to 25 cents on the dollar (to others it was less). We could not in good faith accept that offer, nor the similar one the government made in 2010. In fact, half of all foreign lenders also declined the offer — including U.S. pension funds and others holding several billion dollars’ worth of bonds — and the Argentine government took the unprecedented step of summarily repudiating all of those debts.
I am just one among thousands of individuals who have maintained that the foundation here is the simple principle of fairness. Of keeping one’s word, honoring one’s “bond.” Which is no less important a responsibility to a country’s citizens than it is to its contractual lenders.
Argentina has failed on both counts.
The Argentine government has had this responsibility to its bondholders affirmed by more than 100 U.S. court judgments, and despite promising to respect U.S. law when issuing the bonds, and despite having the ability to pay, has defiantly flouted them all, including obligations to its own citizens. This is absolutely unacceptable.
The politicians who adopted this course of action have branded us as caranchos — “vultures” — even while they benefit from our tax revenues, turn our country’s good name to mud, all the while sitting on some $45 billion in foreign currency reserves.
More than a decade after Argentina’s default, I can fool no one with claims of youth. I have subsisted for years on a government pension. My mother died in 2009 after being sick for years. Because money was tight, I was not able to hire a nurse to give her the care she needed and deserved. She suffered physical ailments, but also from the knowledge that her country had first spurned her, then vilified her.
I’ve invested my life savings, as well as my full faith in the country I love, in which I have toiled my entire life. I expect the Second Circuit decision will help me to recoup both.
Maria Teresa Munoz, a 76-year-old Argentine pensioner, lost her entire life savings in bonds that her country has refused to satisfy, and has barely acknowledged.
