Repsol does not want shares or futures from a country such as Argentina, whose government can hardly keep its economy afloat. The company, especially CEO Antonio Brufau, is asking that Argentina pay the 3.7 billion euros that it owes Repsol for expropriating YPF and in doing so put an end to this international conflict. And Repsol wants the funds now, with good reason.
A team from Repsol has been sent to Buenos Aires with one goal: to tie up loose ends of the agreement between Repsol and the Argentine government. True, Repsol will suffer losses for asking to get its restitution pay early in addition to giving up 327 million euros of earned interest on 10-year bonds with a 8.75% rate.
Even though the Argentine government and President Cristina Fernández Kirchner are showing a late gesture of good will (Minister José Manuel Soria and Prime Minister Mariano Rajoy's involvement was instrumental), their money has not been creditworthy for years.
Argentina has been dealing with hyperinflation for years. As its government regimes keep spending more than it can afford, few investors want to buy Argentine debt, which has a junk bond rating. With this status, Argentina will struggle to get financing while it succumbs to a Lampedusian fate -- reforming a part to conserve the whole even though nothing really changes.
More unfortunate, a bad agreement is better than a good lawsuit considering the circumstances. Argentina and Repsol did not reach the best solution possible, but at least the deal is prudent and reasonable.
