US appellate court sides with bond holdouts, saying 'Argentina breached its promise'

Associated Press: “US appellate court sides with bond holdouts, saying ‘Argentina breached its promise’

 

Ambito Financiero: “Argentina insists: no negotiations with the vulture funds”

 

La Nacion: “The last confession of Cristina Kirchner”

 

Ambito Financiero: “Moody’s lowers ceiling on Argentina’s debt ratings”

 

Foreign Policy: “Argentina's war with the vulture funds”

 

 

Associated Press

US appellate court sides with bond holdouts, saying 'Argentina breached its promise'

 

Friday, October 26, 2012

 

BUENOS AIRES, Argentina – Argentina lost its long battle against bond holdouts in the U.S. courts on Friday, as an appellate panel rejected every argument it made against paying $1.33 billion to investors who refused to accept as little as 25 cents on the dollar for the country's defaulted debt.

The U.S. Court of Appeals for the Second Circuit in New York rejected a dozen appeals Argentina had filed over the years, and ordered the South American country to pay the holdouts an equal amount whenever it makes payments on other debt that has been restructured since the country's economic collapse a decade ago.

 

 

Ambito Financiero

Argentina insists: no negotiations with the vulture funds

 

Friday, October 26, 2012

 

Héctor Timerman reiterated yesterday that there will be no negotiations in the courts of Ghana with the vulture fund Elliot, and that the official strategy will continue to be moving ahead in the African country’s courts, awaiting results from the personal efforts of Bank Ki-Moon or, eventually, going to an international court.

 

“We are going to recover the frigate Libertad, like we have done with all the state assets, recovered without negotiating with the vulture (speculative) funds,” Timerman said in a statement that he read from the Casa Rosada after having met with the President.

 

The Foreign Ministry listed the “28 judicial attachments” suffered by the country on Argentine bank accounts and assets in recent years, and said that “in all the cases the State recovered the asset without ever having to negotiate with the vulture funds.”

 

In all the complaints, the courts of France, the United States, Germany, Switzerland and Italy “lifted the attachments and didn’t side with” the request of the creditors, the foreign minister said.

 

The frigate, a teaching vessel from the Navy, is being detained in the port of Tema, close to Accra, since October 2 by court order in Ghana from a judge who accepted the complaint of the investor group NML Capital, headquartered in the Cayman Islands, for some US$370 million.  A total of 280 sailors were evacuated and arrived yesterday early in the morning in Argentina, whose government left the captain and 44 crew members on board the ship.

 

In Tema, port authorities asked on Thursday that a judge order the removal of the frigate from its position in that it occupies an essential space in that terminal.  “There is enormous congestion in the port and trade activities are virtually paralyzed,” said Asare Darko, attorney for the port authorities.

 

 

Ambito Financiero

Moody’s lowers ceiling on Argentina’s debt ratings

 

Friday, October 26, 2012

 

by: María Iglesia

 

Moodys lowered the ceiling on ratings that local debt in foreign currency can obtain from B2 to B3, it announced yesterday in a statement.  With this downgrade, when a company, bank, province or other party decides to go to the market, it cannot get a rating above B3, which is the ceiling rating that Argentina carries.

 

The decision was adopted after the beginning of this month when the province of Chaco was to pay with pesos a debt that was issued in dollars.  In that sense, Moody’s said that “the lowering reflects the growing concern that the agency has over the private sector and local governments not being able to access the currency exchange markets.”

 

In an interview with this newspaper, Gabriel Torres, vice president of Moody’s and analyst on Argentina, argued that “nobody has the capacity to access dollars besides the national government.”  And he acknowledged that the decision issued yesterday is part of the “Chaco effect.”

 

In the statement, Moody’s argues that “for a while the Central Bank has been controlling the purchase of foreign currency by residents.”  And it goes on to say that while it acknowledges that the monetary entity currently allows the acquisition of currency to attend to debt service payments issued under international law and overseas payees, “the growing restrictions in access to currency for payment of debt on the internal market makes the availability of currency for payment of debt services abroad more uncertain.”

 

Torres explained that, in general, in other countries the ratings on debt issuances from companies, local governments, banks or insurance companies are placed one or two levels above that of the national government.  “We don’t see that happening now in Argentina,” he argued.

 

For the agency, the ceiling in bond ratings reflects the transference and risks of convertibility that a local debt emitter has in foreign currency, which depends on reliable access to cash through operations abroad.  Also, it said that “the current rules do not contemplate the BCRA proportioning access to currency for payment of debt in foreign currencies issued in the country under Argentine law.  Therefore, the debt instruments in foreign currency that are governed by local law are subject to greater risk of non-compliance and generally will be rated under the maximum limit for bonds in foreign currency.”

 

On Monday, Cristina de Kirchner announced the bill that seeks to modify the capital markets.  As part of the changes, the National Securities Commission (CNV) will act as the controller for risk ratings agencies “so that they tell the truth,” according to the President.

 

When asked about this aspect, Torres denied that the decision from Moody’s issued yesterday has to do with it.

 

 

La Nacion

The last confession of Cristina Kirchner

 

Friday, October 26, 2012

 

by Fernando Laborda | LA NACION

 

Last Monday, those present at the Bicentennial Museum not only heard, from the mouth of the President, the presentation of the strategic plan for insurance activity and the announcement of the bill to control the capital markets.  They were privileged witness to a phrase from Cristina Kirchner that came without warning but turned out to be notable: “It is concrete reality from these nine and a half years that we’ve lived through, and from that world out there, also concrete and threatening, that, like the IMF says, is causing the slowdown in economies of Latin America and the Caribbean.” 

 

While you could treat it as a lapse from one of her frequent improvisations, the President, with her statement about a world that is “out there”, she no more than admitted that Argentina is outside of it.  

 

Her recent confession about the Frigate Libertad, which provoked indignation in all military circles (“They could hold on to the Frigate, but no vulture fund nor anyone will hold on to the liberty, sovereignty and dignity of this country”), is also demonstrative of the same: Argentina is every day more isolated from the world, up to even not being able to get external help when faced with an undoubted outrage of international law that is horribly costly.

 

While last August the sales of real estate in Buenos Aires fell 35% according to the Registry College, in Santiago de Chile they grew by 34% in the third quarter.  Not everyone has fallen off the world.

 

There is, as the President says, a concrete reality of nine and a half years.  But there is also another concrete reality from the stage that Cristina has governed, deepened in the last year.  It’s that of a government that, for its own mistakes and not the world’s, lacks budget or credit to finance public works and has decided to take as much cash as it can reach in order to do so.

 

The future of insurance companies is the most recent example.  And certainly it will not be the last.  A time ago, the government obliged those companies to repatriate their funds abroad and prohibited them from issuing reinsurance to foreign companies.  Now they plan to finance supposedly productive activities, which the authorities will indicate to them.  Representatives of the insurance sector and of the government worked elbow to elbow for months on detailing a strategic plan, which the President seemed to finish outlining some hours before her presentation.  The incentives and tax reductions to promote activity were, for now, on track.  State intervention, in turn, moved up to the top of the list.

 

A business leader from the sector summed it up this way: “We feel like students who they promised a graduation trip to Bariloche to and, hours before leaving for the trip, they gave us a ticket to Punta Lara…”

 

 

Foreign Policy

Argentina's war with the vulture funds

 

Friday, October 26, 2012

 

By Joshua Keating

 

Most of the crew of the Argentina navy ship Libertad has returned home, leaving behind their a skeleton crew to man the three-masted sailing ship in Ghana. The Libertad was prevented from leaving Ghana have a local court ruled in favor of the U.S. "vulture fund" NML Capital, which says it is owed $370 million by the Argentine government from its default a decade ago.