See the recent Reuters article below.

Argentina appears to be taking steps to settle various ICSID claims by issuing "settlement bonds" which can be traded by the claimant (albeit, presumably, at a discount). This is being done, it would seem, in order to unlock $1.8 billion in much needed funds from the World Bank/IMF and enable Argentina to access the international capital markets (which have been effectively closed to it for some time).

The reference in the article to the U.S. Generalized System of Preferences program is interesting. Given the level of oil sales by VZ to the US, this system might give the U.S. government some leverage in trying to support the enforcement of ICSID awards in favour of ConocoPhillips (and, hopefully, ExxonMobil). If VZ pays those awards, it's hard to imagine that it would not "clear its name" at the World Bank (which runs ICSID) and pay all successful claimants. In this way, it would maintain its ability to borrow from the World Bank, IMF and other international lenders of last resort. Given the current state of the VZ economy, it is only a matter of time before the country will need such access.

The concept of settlement bonds is interesting. In our case, issuance of such bonds might allow VZ to save face to some extent. In effect, VZ would be borrowing (from claimants) to pay their claims, but KRY and other claimants could realise cash by selling the bonds on. The only trick for KRY and others would be to work out the expected value of the bonds in the market. Not an ideal scenario, but perhaps better than chasing oil tankers around the world for the next 10 years...

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Argentina to pay $500 mln to end disputes at World Bank -report

BUENOS AIRES, Oct 10 (Reuters) - Argentina will offer about $500 million to resolve disputes with corporations at a World Bank arbitration panel, a financial daily newspaper reported on Thursday.

Ambito Financiero reported on its website, without citing sources, that the payment would be made in sovereign bonds to five companies that have filed complaints over a range of grievances at the World Bank's International Centre for Settlement of Investment Disputes.

Representatives at Argentina's economics ministry could not immediately be reached for comment on the report.

The decision coincides with a sensitive time in the South American country's battle in U.S. courts with hedge funds that refused to take part in two debt restructurings following Argentina's 2002 default.

Argentina hopes the Obama administration will ask the U.S. Solicitor General to present arguments to the U.S. Supreme Court on whether the case merits the court's attention, after a lower court ruled in favor of bondholders who will not accept reduced payments under a restructuring agreement.

The International Monetary Fund and some U.S. officials have said they were concerned that if Argentina were to be forced to pay the non-participating investors, it would become more difficult for cash-strapped countries to restructure their debts in the future.

The Ambito Financiero newspaper said the companies to be paid include France's Vivendi SA, British electric and gas utility National Grid PLC and Continental Casualty Company, a unit of Chicago-based CNA Financial Corp.

U.S.- based water company Azurix and Blue Ridge Investments, a subsidiary of Bank of America Corp, will also receive compensation, the report said.

Economy Minister Hernan Lorenzino, in Washington this week for World Bank and International Monetary Fund meetings, aims to unlock up to $1.8 billion credit lines from those institutions, the newspaper said.

Argentina's sovereign default in 2002 effectively ended the country's ability to tap global bond markets. Falling levels of foreign direct investment and a huge bill for gasoline imports have led to dwindling foreign reserves, making additional credit lines crucial to finance government spending and supply individuals and businesses with foreign currency.

In May 2012, the United States suspended Argentina from the U.S. Generalized System of Preferences program, which waives import duties on certain goods from developing countries, after the South American nation failed to pay about $300 million in compensation awards in disputes involving Azurix and Blue Ridge Investments. It was the first time a country had been suspended from the program for failing to pay an arbitration award.

The United States imported $477 million worth of goods from Argentina under the program in 2011, which was about 11 percent of total U.S. imports from the country that year.