El Cronista: “Debt: U.S. court decides in 10 days on payment plan to creditors”

Debt Coverage:

 

Ambito Financiero: “Seeking support from G-20 over New York decision (it will be difficult)”

 

El Cronista: “Debt: U.S. court decides in 10 days on payment plan to creditors”

 

 

Ambito Financiero

Seeking support from G-20 over New York decision (it will be difficult)

 

Tuesday, October 30, 2012

 

By Carlos Burgueño

 

The government will try to get the support of the G-20 against the actions of the vulture funds.  It will be between November 4 and 5, in Mexico, in the last meeting of the year of the ministers of Finance of the block.  The argument that the head of the Palacio de Hacienda, Hernán Lorenzino, will bring with him is that Friday’s decision against Argentina in the higher court of New York not only harms the country if it remains firm, but that it complicates all the negotiations of debt restructuring, especially Greece.  If there is no firm condemnation from the group together with a call on the American courts and a halt in the advance of these funds, no negotiation that is underway in Europe could have legal security.  That is the official view. 

 

Clause

 

The argument could be relative, as the debt restructurings going on today include a clause: the extension to 100% in accordance with the majority of the bondholders.  Also, the restructurings in Europe are being done outside of New York law.

 

It will not be easy for the Argentine delegation to get this support.  The main official that could hear the position, U.S. Treasury Secretary Timothy Geithner will not travel to the ministerial meeting of the G-20.  The delegation will be led by Lael Brainard, assistant secretary for International Affairs.  The summit begins only two days before the presidential elections in the United States and shortly after Geithner had occasion to meet with his peers of the G-20 in the annual meeting of the Monetary Fund in Tokyo.

 

Geithner will be leading Treasury for some months but has already said that he will not stay on Barack Obama’s team if the President is re-elected and starts a new term in January 2013.

 

The agenda of the Mexico meeting, for now, doesn’t include Argentina’s case nor the chapter about the vulture funds, according to what the Mexican vice foreign minister, Lourdes Aranda, reported yesterday from Cancún, where she is leading the meeting of the “sherpas”, as the high level delegates who prepare the meetings.  Among the issues that will be discussed are cuts in developed states, the possibilities for exiting the international financial crisis and IMF reform.

 

The G-20 is made up of 19 member countries El G-20 está integrado por 19 países miembros y la Unión Europea y es el foro de cooperación más importante en los temas relevantes de la agenda económico-financiera internacional.

 

A partir de la crisis de 2008, se resolvió que sea en este grupo en donde se discutan las políticas globales contra la crisis.

 

 

El Cronista

Debt: U.S. court decides in 10 days on payment plan to creditors

 

Tuesday, October 30, 2012

 

By Juan Cerruti

 

The judge of the Second District of Manhattan, Thomas Griesa, is preparing to turn out a citation in the coming hours to the attorneys for Argentina and the creditors that got a ruling last Friday from a higher court on the debt in default.  It came out that the meeting that will be held by the New York judge will convene will take place next week and will be key.  Because there he will explain the form in which the Argentine government will have to carry out the principle of “Pari Passu”, which establishes equal treatment for the creditors.  And as such oblige the country to make an offer to the bondholders that didn’t enter the swaps of 2005 and 2010, among whom are various vulture funds.

 

“They advised us informally today (yesterday) and with the reasons of delay caused by Hurricane Sandy, that the formal summons was not sent but Griesa will certainly do so this week and the meeting will be next (week),” said the attorney for one of the creditors to El Cronista.

 

The citations will be sent to Argentina’s attorneys – the law firm of Cleary, Gottlieb, Steen & Hamilton- and the legal representatives for the bondholders – the funds NML Elliott (which got an attachment on the Frigate Libertad), Dart, Aurelius, A.C.Paster, Blue Angel and a dozen Argentine citizens. 

 

What Greisa says to the attorneys on both sides will be crucial, because it will determine the reach of the equal treatment that the Appeals Court confirmed on Friday.  And, in particular, the amount and payment plan that Argentina will have to offer the so-called holdouts (the creditors that didn’t enter the previous swaps).

 

Yesterday there were meetings and conference calls all day at the Economy Ministry with the attorneys for the country from New York, to lay out the strategy to follow after the decision from the Court of Appeals.  Economy Minister Hernan Lorenzino and Finance Secretary Adrian Cosentino, are in charge of the matter.  In the afternoon, Lorenzino arrived at the Olivos compound to report to the President, Cristina Fernández de Kirchner, on the reach of the decision and the options to follow after Friday’s ruling.

 

In the government they are still debating whether to appeal the measure in this court or wait until Griesa decides the form and reach of the payment to the holdouts.  Overall, the last legal option remaining after Argentina’s appeal is that the lawsuit arrive in the U.S. Supreme Court, which is unlikely.

 

In this context, yesterday the markets continued to show nervousness over the decision in New York.  Country risk topped 1000 basis points and closed at 1024.  Meanwhile bonds suffered drops of up to 4.5% and insurance against default for Argentina (CDS) hit their highest point in four years.  Also, U.S. investment banks J.P.Morgan, Bank of America and Barclays issued reports to their clients in which they recommended reducing their holdings of Argentine bonds after the Court of Appeals decision.

 

The Court of Appeals ruled on Friday to uphold Judge Griesa’s finding: in favor of the theory of “pari passu” which establishes that Argentine has to give equal treatment to the bondholders that entered the swap on debt in default and those that didn’t.  By that it obliges the country to also pay the holdouts.

 

The New York appeals court said in its 29 page decision that Judge Griesa included two possible payment alternatives for holders of public bonds in default, but clarified that they are not “capable of descerning with precision from the evidence how this formula would work.”  The next step is that they asked Griesa to clarify “how this mandate would work.”