The Argentine government has hired a private plane for an upcoming trip for President Cristina Fernandez de Kirchner. They fear that creditors would try to have the official government plane, Tango 01, seized in an effort to collect debts owed to them by the Argentina government. Melissa Block talks with Shane Romig, a foreign correspondent for Dow Jones News Service and the Wall Street Journal, for more on the story.
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MELISSA BLOCK, HOST:
When Argentina's President Cristina Fernandez de Kirchner travels to Asia and the Middle East this month, she won't be flying on the official presidential plane. That's because Argentina fears the Boeing 757 jet known as Tango 1 will be seized when it lands by creditors, bond holders who hold sovereign debt that Argentina has defaulted on. So, instead of taking that risk, President Fernandez will be flying on a rented charter plane at the cost of $880,000.
Shane Romig of The Wall Street Journal joins me from Buenos Aires to explain and Shane, who are these creditors? Argentina calls them vulture funds. Who are they?
SHANE ROMIG: There's a number of hedge funds who have purchased large shares of defaulted debt from Argentina. The leading one is called NML Capital, which is a unit of Elliot Management Corp, which is founded by the U.S. billionaire Paul Singer. And (unintelligible) Capitol is another large one of these funds and these are companies that hold these defaulted bonds and they have strategically decided to pursue Argentina for full compensation on these bonds and rejected a pair of offers that Argentina has made to bond holders for discounted credit swaps.
The vast majority of the people who held Argentina's defaulted bonds accepted those deals, about 93 percent, but about 7 percent of the bonds were not tendered and a large share of those are in the hands of these funds that are pursuing full compensation.
BLOCK: Overall, Shane, how much money are we talking about? What's the scale of the default by Argentina?
ROMIG: Well, the default in 2001 was on about - close to $100 billion worth of bonds. These hedge funds have received awards from U.S. courts for 1.6 billion. Argentina has steadfastly refused to pay up and is fighting this in every way it can and so the hedge funds on the other side are trying every way they can to try and actually collect on some of this.
BLOCK: And the fear is that these funds would take this opportunity to seize the plane to get compensation. Not a baseless fear, it sounds like. There was an Argentine Naval ship that was seized in Ghana last year for just these reasons, right?
ROMIG: Yes, exactly. For two and a half months, the ship was held in the Ghanaian port of Tema after NML Capital convinced a judge to seize the ship there. So, Argentina appealed that and appealed to a U.N. tribunal and the U.N. tribunal came down on Argentina's side saying that the ship couldn't be held to satisfy these kind of debts and the ship was released.
BLOCK: And the ship is now back home?
ROMIG: The ship is back home. It arrived on Wednesday to a big celebration with the president and military and government officials and fireworks.
BLOCK: Shane, has President Fernandez flown charter before for just this reason?
ROMIG: Yeah, well, there's been attempts to seize the Tango before and then the government has contracted a plane from this company before in 2010 and 2011 for trips to Guyana and Europe.
BLOCK: Is this all a point of national pride in Argentina somehow, that, yes, the president will fly charter to keep the official presidential plane from being seized?
ROMIG: The fight with the hedge funds and her calling them the vulture funds and their commitments to not pay these companies, this is definitely an issue of national pride. I think that renting this plane is just to avoid - it would be a terrible embarrassment if the president was on a trip and in the middle of this trip, had the plane seized and she's left to scramble and try and find an alternative to get out of whichever country she's in.
So I think they're just being - coming on the heels of the ship seizure, I think they're being a bit practical, saying let's not take a chance with this.
BLOCK: It would put her in a bit of a tight spot, wouldn't it?
ROMIG: Yes, definitely.
BLOCK: Shane Romig, it's good to talk to you. Thank you.
ROMIG: Thank you, Melissa. It's been a pleasure.
BLOCK: Shane Romig is a foreign correspondent with the Wall Street Journal in Buenos Aires, Argentina. Transcript provided by NPR, Copyright NPR.