Clarin
The bitter harvest of repeated breaches
Friday, October 26, 2012
By Marcelo Bonelli
The attachment of the Frigate Libertad is another chapter in the unresolved story of the debt in default, an issue that also is an obstacle to the country’s access to the international credit market.
Up and down. Economy Vice Minister Axel Kicillof, September 20
The international embarrassment generated by the attachment of the Frigate Libertad unveils an economic problem underneath: after a decade, Argentina still has not resolved the problem of the default of its foreign debt.
The attack by the fund NML Capital on the Navy ship reveals that the government could not conclude a negotiation that was initiated in a successful manner by Nestor Kirchner. The unprofessionalism and the improvisation by current officials, which impedes the closing of that financial chapter, has high costs for Argentina. One is that, while ignoring international legislation, vulture funds are holding a ship of the National State. Another is that the country remains on the margins of cheap international credit, like those which the Paris Club could provide for infrastructure projects, nor can it seek private funding like Bolivia has just done at an interest rate of only 4.9%. The government would have to pay 11% at a minimum.
The offensive against state assets is possible because the country continues to have – for more than 10 years – unpaid obligations that have not been negotiated for a total of US$34.285 billion.
A secret “paper” from Minister Hernan Lorenzino acknowledges that the debt with the bondholders is US$11.2 billion, with the Paris Club it’s US$6.748 billion plus interest, and the lawsuits from the ICSID come to US$13.6 billion.
Barack Obama personally asked Cristina Kirchner on November 9 to normalize those commitments. And during the private meeting they held, the President committed to paying a ruling that the ICISD issued for a U.S. company, CMS.
Cristina never followed through and Washington responded with a clear green light to the bondholders and made possible the complaints from the Paris Club and the threats from the IMF.
Cristina committed herself to paying the debt with the Paris Club in cash: she signed a decree and announced it at the Casa Rosada in 2008.
But she didn’t pay. Added to the presidential breach were various other efforts of ex-minister Amado Boudou that ended up just being formalities. For that, the head of the organization, Ramón Fernández, he accommodated the most hardline sectors against Argentina. The French Treasury secretary communicated to the Palacio de Hacienda that he will only deal with the Lorenzino-Axel Kicillof duo through written documents.
The lack of agreement with the Paris Club is generating two problems: Argentina has no cheap international credits for infrastructure projects, like railways, which could have avoided the Once tragedy.
–There exists a real international isolation.
No developed country has shown solidarity with it before the outrage of the attachment of the teaching vessel.
The vulture funds are trying to attach Argentina since the day that Adolfo Rodríguez Saá defaulted. In more than 10 years they never were able to follow through on their purpose and now they did so by the malpractice and amateurism of many local officials.
The only partial success that the speculators have had was when they froze a deposit from the Central Bank destined to paying the IMF debt. Then, international courts sided with the BCRA, then led by Martín Redrado. Now, the attachment of the Frigate Libertad follows the lack of foresight and a late reaction, which again clearly shows the terrible management of the government.
Héctor Timerman failed in the UN and Argentina didn’t work professionally where it should have: with corps of attorneys hired in Ghana, to release the Frigate. Faced with the problem, the firm of Cleary & Gottlieb, which advises on the debt issue, was absent or acted through its attorney Jonathan Blackman, as disoriented as the Casa Rosada.
This box was considered by the business associations, which met to evaluate the capital market reform. In those meetings Kicillof’s phrase to explain the move was commented about: “Companies used to shovel cash out, now they’ll have to put in.” This is how the official revealed the true intention of the plan. The government wants to use confidential information on the companies to pressure and threaten those businessmen that don’t see the right conditions for investing in Argentina. This was analyzed in the Argentine Business Association and the Argentine Industrial Union. In the meetings, many said that the reform includes, in part, old projects from the era of Domingo Cavallo, but they fear the discretionality and hostility from the government toward private activity.
This year the Securities Commission (CNV) opened 13 summary reviews, but only on companies being persecuted by the Casa Rosada like Siderar, Gas del Norte (both part of Techint), Papel Prensa, Clarín, Cablevisión, Boldt and economist Orlando Ferreres.
They’re pursuing Ferreres because he gave out precise data on inflation and Boldt since the time its director, Guillermo Gabella, spoke out against Boudou in the Ciccone scandal.
On Tuesday, Adelmo Gabbi, head of the Bolsa de Comercio, had a very strong argument with the head of the CNV, Alejandro Vanoli.
He accused him of being disloyal and ungrateful, and Vanoli responded that they were going to put an end to the gamblers. It was the second round of the public speech that Gabbi gave a the Academy of the Capital Markets. Before Vanoli, he spoke of the lack of trust that the government was creating. Gabbi was one of the most loyal members of the establishment to the government. Now the Rosada is paying him back: the institution that will suffer the most from the reform is the Bolsa de Comercio, which will lose its function. It’s another businessman with close ties to the late Nestor Kirchner who is being expelled from the official paradise of the President and La Campora.
Ambito Financiero
The Espora: sailors pointed toward abandoning South Africa
Friday, October 26, 2012
By Edgardo Aguilera
The commander of the corvette ARA Espora, captain of the frigate Daniel Finardi and his crew are working hard to button up the ship and depart as soon as possible from the pier at Simonstown, alongside the main naval base in South Africa. It’s not free of the risk of an attachment planned by the vulture fund NML of magnate Paul Singer against the ship that is being repaired, without a set date for departure. It is presumed that NML is watching the dates on movements of ships from the Argentine Navy abroad, when and where they are docked.
The information on the arrival of the corvette Espora into the South African port was in the public domain, appearing in various press reports, among them the official website of the South African navy, before which it was known that mechanical failures forced it to extend its stay until now – 15 days – in the port.
The arrival in Simonstown was on October 9, and was planned to dock at the end of naval exercises called Altasur IX together with the frigate Uruguay from the Uruguayan Navy, the frigate Barroso of the Brazilian navy and the frigate SAS Amatola of the South African hosts. The official schedule stated that after Altasur IX, the corvette Espora would remain in South Africa to join for the first time in the naval exercise Ibsamar III, between October 10 and 26, together with the navies of Brazil, South Africa and India, in that same South Atlantic zone. The list also included a stay in the port of Cape Town during the weekend of October 20-21 to allow public visits. Because of the breakdown, the corvette stayed out of the Ibsamar III operation.
That international exercise was authorized under Law 26.772 on the exit and arrival of national troops between September 2012 and August 2013 approved by Congress on October 10.
Argentina’s ambassador in Pretoria, Carlos Sersale di Cerisano, knew the agenda and the days in port for the corvette Espora, the Ibsamar III exercise was part of the government’s policy of opening to Asia.
The precedent – in the area of defense – was the resolution signed jointly in 2007 by then ministers of Defense, Nilda Garre, and Foreign Relations, Jorge Taiana, which established the creation of Defense attaches in India, Australia, South Korea and Japan. The secretary of International Affairs of the Defense ministry, Alfredo Forti, has been pushing since Garre’s term for the inclusion of the Navy in the trilateral maneuvers of India, Brazil and South Africa, a goal which was achieved this year.
“We’re awar that it has no problems at all, and that it would not be subject to any arbitrary, unfounded legal decisions like has happened in Ghana (the frigate Libertad)”, said Minister Arturo Puricelli yesterday in a Radio 10 interview. Two legal teams are listing preventive solutions to shield the corvette, led by Susana Ruiz Cerruti of the Foreign Ministry and by him, for Defense.
As a gray artillery ship, undeniably identified as a war ship, it seems unlikely. The poor luck suffered by the frigate Libertad in Ghana doesn’t dispel the specter, it was seized even though it is covered by the UN Convention on the Law of the Seas which in article 292 establishes that war ships and other ships of state without commercial ends are protected by sovereign immunity and, as such, are free of requisitions and attachments.
There was another way out under study, a preliminary measure promoted in a federal administrative tribunal on the “grave, precise and concordant presumption” of the intentions of the NML fund.
The technical grounds is a “declarative action of certainty” for the tribunal to understand in the proposal saying that the war ship’s status of not being subject to attachment conforms to international law. The process should be called for by the South African embassy in Buenos Aires and from there is channeled to that country’s courts. That recourse immediately opposes the attempts by NML to grab the Espora.
Bloomberg (Terminal)
Thursday, October 25, 2012
By Drew Benson and Katia Porzecanski
Oct. 25 (Bloomberg) -- For all the embarrassment billionaire Paul Singer caused Argentina by seizing one of its navy ships, the biggest triumph in a decade-long dispute brings him just 1 percent closer to recouping his $1.6 billion claim.
The hedge fund manager still lacks the leverage to compel the government to settle, even after Argentina sought help from the United Nations, evacuated part of the 326 member crew and fired the head of its navy since Ghana impounded the training vessel on behalf of Singer on Oct. 2, according to Anna Gelpern, a professor at Georgetown University. Singer, who owns debt from Argentina’s $95 billion default, rejected two restructuring offers that paid investors 30 cents on the dollar and is seeking to force the South American country to repay in full.
While Singer’s efforts from freezing Argentine central bank funds in New York to seizing the navy’s tall ship in Africa have failed to result in payouts, Argentina’s unwillingness to
resolve the claims has also prevented the nation from tapping the international credit markets for more than a decade. That’s prompted the government to use foreign reserves to pay debt and increased its borrowing costs to more than double the 4.65 percent average for developing nations.
resolve the claims has also prevented the nation from tapping the international credit markets for more than a decade. That’s prompted the government to use foreign reserves to pay debt and increased its borrowing costs to more than double the 4.65 percent average for developing nations.
“It’s getting loopier and loopier,” Gelpern said in a telephone interview from Washington.
“They’re throwing mud at the wall to see what will stick.”
Peter Truell, a spokesman for Singer's New York-based hedge fund Elliot Management Corp., declined to comment on the ship seizure and the firm’s attempts to recoup its money.
Sovereign Immunity
The average yield on bonds issued by Argentina, the world’s largest soybean exporter, is 10.62 percent. That’s more than twice the 4.875 percent rate that Bolivia, one of the region’s poorest countries, offered to sell 10-year bonds on Oct. 22. Ghana detained the Argentine vessel after a court in the West African nation ruled in favor of a claim by Elliott’s NML Capital Ltd. that the prospectus for the defaulted Argentine bonds waived sovereign immunity on attachable assets.
Sovereign Immunity
The average yield on bonds issued by Argentina, the world’s largest soybean exporter, is 10.62 percent. That’s more than twice the 4.875 percent rate that Bolivia, one of the region’s poorest countries, offered to sell 10-year bonds on Oct. 22. Ghana detained the Argentine vessel after a court in the West African nation ruled in favor of a claim by Elliott’s NML Capital Ltd. that the prospectus for the defaulted Argentine bonds waived sovereign immunity on attachable assets.
Argentina modified prospectuses on bonds issued in its 2005 and 2010 restructurings to exempt certain assets, including military property, from the sovereign immunity waiver.
Lawyers for NML wrote in an Oct. 5 letter that the fund would authorize the navy ship to leave the port of Tema if the country posted a $20 million bond, according to legal correspondence obtained by Bloomberg.
‘Take Our Frigate’
After the ARA Libertad was held in Ghana for almost three weeks, President Cristina Fernandez de Kirchner ordered on Oct. 20 the evacuation of sailors on board the three-mast frigate, including crew members from Brazil, Chile, Uruguay, Paraguay, Venezuela, Ecuador, Bolivia and South Africa.
‘Take Our Frigate’
After the ARA Libertad was held in Ghana for almost three weeks, President Cristina Fernandez de Kirchner ordered on Oct. 20 the evacuation of sailors on board the three-mast frigate, including crew members from Brazil, Chile, Uruguay, Paraguay, Venezuela, Ecuador, Bolivia and South Africa.
While she also ordered the government to seek damages from Ghana, two days later Fernandez said they could keep the ship.
“As long as I’m president, you can take our frigate, but nobody is going to take the liberty, the sovereignty and dignity of this nation,” Fernandez said in an Oct. 22 speech.
The government chartered an Air France jetliner, which isn’t subject to seizure upon landing in Ghana, to fly the stranded sailors back to Buenos Aires.
Litigating creditors that also include Kenneth Dart, the billionaire foam-cup magnate who runs EM Ltd., have attempted to satisfy judgments through an array of ploys including the freezing of Argentine bank accounts and trying to ground the presidential plane Tango 01 during a maintenance trip to the U.S. They’ve been mostly unsuccessful so far, even though legal appeals have reached as high as the U.S. Supreme court.
‘Small Potatoes’
While the ship, worth just 1 percent of the value of outstanding claims that Singer owns, is “small potatoes,” the hedge fund manager could ultimately gain the upper hand if it wins a separate case in U.S. federal appeals court, said Mark Weidemaier, a law professor at the University of North Carolina.
Argentina appealed a decision from a U.S. district court that a so-called pari passu clause in the defaulted debt securities bars Argentina from paying owners of the new bonds before it pays the so-called holdouts. If upheld, the ruling could force Argentina into default on bond payments if it refused to pay the hedge funds. The court heard arguments in July and a ruling is expected any day.
‘Small Potatoes’
While the ship, worth just 1 percent of the value of outstanding claims that Singer owns, is “small potatoes,” the hedge fund manager could ultimately gain the upper hand if it wins a separate case in U.S. federal appeals court, said Mark Weidemaier, a law professor at the University of North Carolina.
Argentina appealed a decision from a U.S. district court that a so-called pari passu clause in the defaulted debt securities bars Argentina from paying owners of the new bonds before it pays the so-called holdouts. If upheld, the ruling could force Argentina into default on bond payments if it refused to pay the hedge funds. The court heard arguments in July and a ruling is expected any day.
“If you can present the government with the choice between default and paying you, you’re in great shape,” Weidemaier said.
Diego Ferro, who helps oversee more than $500 million at Greylock Capital Management LLC in New York, says Argentina will continue to struggle to protect its property abroad as long as Fernandez refuses to settle with the hedge funds.
‘Very Careful’
“If you’re Argentina and you don’t want to comply with judgments from U.S. courts, which Elliott has won, you have to be very careful with where you have your assets around the
globe,” Ferro said. “In this case, they made a mistake and they’re paying for it.”
‘Very Careful’
“If you’re Argentina and you don’t want to comply with judgments from U.S. courts, which Elliott has won, you have to be very careful with where you have your assets around the
globe,” Ferro said. “In this case, they made a mistake and they’re paying for it.”
The extra yield, or spread, investors demand to hold Argentine government dollar bonds instead of U.S. Treasuries narrowed eight basis points to 850 at 1:15 p.m. in Buenos Aires, according to JPMorgan.
The cost of protecting Argentine debt against non-payment for five years with credit-default swaps rose 16 basis points to 972 basis points, data compiled by Bloomberg show. The swaps pay the buyer face value in exchange for the underlying securities or cash if a government or company fails to comply with debt agreements.
Warrants tied to Argentina’s economic growth rose 0.04 cent to 12.52 cents. The peso slid 0.1 percent to 4.7513 per dollar.
Argentina is unlikely to let a $20 million ship force it to negotiate with Elliott after thwarting its legal advances for a decade and may instead dig in its heels, said Jorge Piedrahita, chief executive officer at Torino Capital LLC. Fernandez’s Foreign Ministry has derided Elliott as a “vulture fund” that mounted “an attack that is nothing less than kidnapping, extortion and an act of piracy against a sovereign nation,” according to an Oct. 20 statement.
“I don’t think the government feels more pressure to reach a solution with the vulture funds with this boat,” Piedrahita said in a telephone interview from New York. “They are ideologically walled in to not doing so.”
--Editors: Lester Pimentel, Daniel Cancel
To contact the reporters on this story: Drew Benson in New York at +1-212-617-7949 or
abenson9@bloomberg.net;
--Editors: Lester Pimentel, Daniel Cancel
To contact the reporters on this story: Drew Benson in New York at +1-212-617-7949 or
abenson9@bloomberg.net;
Katia Porzecanski in New York at +1-212-617-0408 or kporzecansk1@bloomberg.net
Bloomberg
Thursday, October 25, 2012
By Drew Benson and Katia Porzecanski
For all the embarrassment billionaire Paul Singer caused Argentina by seizing one of its navy ships, the biggest triumph in a decade-long dispute brings him just 1 percent closer to recouping his $1.6 billion claim.
The hedge fund manager still lacks the leverage to compel the government to settle, even after Argentina sought help from the United Nations, evacuated part of the 326 member crew and fired the head of its navy since Ghana impounded the training vessel on behalf of Singer on Oct. 2, according to Anna Gelpern, a professor at Georgetown University. Singer, who owns debt from Argentina’s $95 billion default, rejected two restructuring offers that paid investors 30 cents on the dollar and is seeking to force the South American country to repay in full.
Ghana News Agency
Thursday, October 25, 2012
A GNA feature by Belinda Ayamgha Accra, Oct. 25, GNA – It started as a goodwill visit on October 1 to strengthen the bonds of friendship between Ghana and the South American state of Argentina.
An Argentine navy ship, ARA Fragata Libertada, with more than 300 crew from Argentina, berthed at the Tema harbour as part of a West African tour to train Ghanaian navy personnel.
Also on board were military personnel from Bolivia, Chile, Paraguay, Peru, South Africa, Suriname, Uruguay and Venezuela. After all, Ghana and Argentina have enjoyed cordial ties since the agreement for the establishment of diplomatic relations between both countries was signed on the November 22, 2005.
Associated Press
Thursday, October 25, 2012
BUENOS AIRES, Argentina — They were supposed to sail the Argentine military's signature tall ship into the port of Buenos Aires in full glory after a goodwill tour asserting the South American country's place in the world.
Instead, hundreds of sailors had to abandon their frigate, evacuated on orders from President Cristina Fernandez, after the ARA Libertad was detained by a Ghanaian judge in a debt dispute.
Frustrated and disheartened but determined to go back as soon as possible to retrieve their three-masted ship, the sailors arrived home early Thursday on an Air France charter. The Argentine government couldn't send one of its own planes, for fear that it, too, could be seized as collateral.
Buenos Aires Herald
Thursday, October 25, 2012
Foreign Minister Héctor Timerman
Foreign Minister Héctor Timerman stressed that Argentina will not negotiate with vulture funds in order to recover the Libertad navy training frigate, which remains impounded in a Ghanaian port since October 2, and whose crew arrived in Buenos Aires early on Thursday.
“We will recover the Frigate as we recovered all other Argentine assets, without negotiating,” Timerman added as he read a list of the country’s assets embargoed in the past due to claims by vulture funds led by billionaire US businessman Paul Singer.
Keine Kommentare:
Kommentar veröffentlichen