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Dienstag, 30. Juli 2013

A French newspaper highlighted the support from the French government for Argentina in the case against the vulture funds

A French newspaper highlighted the support from the French government for Argentina in the case against the vulture funds
Tuesday, July 30, 2013
The economic newspaper Les Echos, in an extensive articles, highlighted the support offered by France for Argentina in the judicial process being taken to the U.S. Supreme Court.
“The International Monetary Fund (IMF) threw in the towel.  France, for its part, decided to jump in: after doubting for weeks it is giving its support to Argentina against the vulture funds before the U.S. Supreme Court by filing what in legal jargon is called an “Amicus Curiae” (friend of the Court),” argues the article published in the economic newspaper.
On Friday, Economy Minister Pierre Moscovici announced the decision of the French government.
According to the newspaper, the measure was not “unprecedented in any way but (indeed was) very surprising, taking into account that not even the United States wanted to take a stand in a case that pits Buenos Aires against millionaire Paul Singer Elliot (NML)”.
“By giving its support to Argentina before the highest American jurisdiction, France (a creditor of Argentina) is hoping to weigh in on the decision of the judges,” added the article signed by journalist Isabelle Couet.
The Economy ministry of France through its website confirmed on Friday that it put the “Amicus Curiae” in the U.S. Supreme Court’s inbox.
In it, it backs Argentina’s position against the vulture funds and rebuts many arguments of the U.S. judiciary.
“The ‘Amicus Curiae’ without a doubt will provoke criticism, especially among those who consider Argentina a pariah state.  In any case, the French government decided to take any ambiguity away from its positions,” the article in Les Echos emphasized.
The prestigious economic newspaper recalled that last March, the Court of Cassation in France impeded Elliott from attaching funds that three French companies had to pay to Argentina.
“A decision that many experts in international law considered to be audacious,” the economic newspaper said.
For its part, the economic website Boursorama also echoed France’s intervention today, after it was announced on Sunday, in a detailed article.
Boursorama highlights the statements made on Friday by Minister Moscovici, who argued that “the principle itself of ordered and negotiated restructurings of sovereign debt, in particular those carried out in the framework of the Paris Club, could be affected.”
“The decision of the Court could discourage the participation of good faith creditors to resolve debt reduction crises and also has significant implications for many developing countries and weakens their revenues,” the French official added.
Moscovici clarified that the French initiative “is not linked to the specific Argentine case” but “motivated by the commitment of France in the preservation of international financial stability and its role in the heart of the Paris Club.” 
In its article today, the economic site says that “if France took a step it is because it has interests to defend,” alluding to the debt of US$8 billion that Argentina has with the Paris Club, presided over by France.
[NOTE: This Telam wire story was also published by Ambito Financiero.]
El Cronista
Large funds abandon Argentine bonds after IMF setback
Tuesday, July 30, 2013
Investors that bought Argentine bonds hoping the U.S. Supreme Court would take into account the lawsuit that the country has against creditors experienced a double loss in their holdings after the International Monetary Fund (IMF) and the American government gave up on supporting Argentina.  
After the biggest weekly increase in four years pushed restructured bonds prices in dollars from Argentina to a seven-month high on July 23, bonds lost an average of 5.62% with the stances of the IMF and the Justice Department to stay to the side and not file any brief in favor of the country.
Thus, the volatility of the Argentine debt came to quadruple in the last two weeks up to more than six times the average for emerging markets, according to data compiled by Bloomberg.  
While Citigroup said that the last recovery was “exaggerated,” it’s likely that the oscillations in prices are persisting while speculators try to anticipate decisions, like on the sum that Argentina will have to pay the “holdouts” and if the Supreme Court will end up taking the case.
TCW Group, which at the end of May had Argentine bonds with a nominal value of more than US$200 million, sold most of its holdings in recent weeks.  “Due to the current underlying situation, Argentina is not a long-term investment,” said David Robbins to the Bloomberg news agency, as he collaborates in managing some US$10 billion in emerging market debt in TCW.  “It’s more a business opportunity ,” he added.
On June 24, Argentina asked the Supreme Court to analyze its legal conflict with a group of “holdouts” led by the multimillionaire hedge fund director Paul Singer, but the response of the supreme tribunal is still long from being known.
La Nacion
The doubt, once again, is if the credit will arrive
Tuesday, July 30, 2013
by Diego Cabot | LA NACION
The largest public works project proposed by Kirchnerism could open up a new way to finance infrastructure, or on the contrary once again confirm that, despite a “won decade”, the govenrment never managed to achieve the necessary confidence for the world to put money into big projects in the country.
Nobody in the last 10 years invested between US$4.5 and US$5 billion in Argentina.  Never in that time has a similar credit been granted.  Could the government of China give the money for the hydroelectric dam projects Nestor Kirchner and Jorge Cepernic, previously called Cóndor Cliff and Barrancosa?  Will it manage to finance the generators installed in the Santa Cruz river basin despite the electrical sector seeing red on its balance sheets?  Until now, the record that Kirchnerism has racked up in matters of financing is not helping one imagine it.
President Cristina Kirchner has been given the luxury of bidding out the project for the third time and is at the point of judging it for the second.  All the attempts have not done anything more than sweeten campaigns.  The same always happened: at the moment of putting in millions, everything comes to an end.
This time, all the capital for financing the project must be put in by the consortium that is given the project in exchange for an interest rate and, of course, the operation of the dam.  Then, the government will pay it back in installments.  The Assistant Secretary for Coordination in the Planning Ministry, Roberto Baratta, one of the officials that speaks on behalf of Minister Julio de Vido, was charged in recent days with notifying and counseling the bidders.  He informed them that despite nothing being official yet, the consortium made up of Electroingeniería, Hidrocuyo and Gezhouba Group (China), which has Chinese financing, will come in first in the order of merit of the bids.  Then came the advice: he repeated to them with emphasis that the government does not want any challenges that could halt the bidding process.
If the construction firms that are fighting to end up with the project make a case, it will be the time to see if Eastern money is coming at all for Argentine infrastructure.  In recent months, a new direction was called for within trade relations with China: railways.  But the difference with what will happen with this mega-project, which requires long-term financing, is that the wagons that will populate the Sarmiento and Mitre lines were paid in a C.O.D. manner, almost in cash.
Kirchnerism never could finance a project with private money, with international credits or with direct loans from a govenrment.  There were indeed attempts, Casa Rosada events, and announcements.
The first similar case of this was the ill-fated bullet train.  There were private banks, intermediation o the French government and a lot of lobbying by Alstom for the project to be done.  But it never found a volunteer to put dollars into a deal of which it was not known how much it would recoup, who would operate it and what the rules of the game would be.
Something similar happened with previous biddings on the dams.  How to finance a project that will sell electricity when neither the price will be known nor the regulatory conditions?  There is no genuine investment to build the infrastructure that the country needs like it needs air.  Perhaps China is the last candidate that Argentina has left.  But the easterners know the rules.  The smile for the announcement is negotiable; the money is not.

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