Once it emerges from default, the ratings on the defaulted bonds would be lifted, too.
Defaulted bonds from municipalities like Vallejo, Calif.
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But a sale would probably leave slim pickings for U.S. holders of Venture's now-defaulted bonds, judging from the market's response to events: Senior subordinated notes in Venture have been trading for as little as 3 cents on the dollar.
Argentine President Cristina Kirchner has claimed that paying 100% to these holdouts would violate Argentine law, which states that no holders of the defaulted bonds can be offered better terms than those accepted by 93% of investors in 2005 and 2010.
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When Quito recently defaulted on bonds bearing the name of the man who engineered an earlier bail-out -- then-U.S. Treasury Secretary Nicholas Brady -- the Clinton Administration, in its wisdom, decided to make an example of Ecuador.
"No utility bond defaulted during the 1930s, while virtually all the railroad bonds defaulted, " he says.
Usually that payout is determined by the value of the defaulted, old bonds.
Like Ecuador, Argentina quarrelled with the IMF and defaulted on its bonds.
The result was that, a year later, Argentina defaulted on its bonds, leaving it with obligations that it has still been unable to pay.
When Greece defaulted on renegotiated its bonds a little while back all those who had Greek law bonds took up to 90% haircuts.
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Since then, Argentina has restructured its massive debt twice, offering creditors new bonds for the defaulted ones.
It has already defaulted on two sets of bonds (though it then bought most of them back at knock-down prices).
And since municipal bonds very rarely defaulted, everyone was happy.
More momentously, LTCM made the mistake of going long on Russian bonds right before Russia defaulted.
This statute precludes any nation from selling bonds or other securities in the United States so long as it has outstanding defaulted obligations to the American government.
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