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Mittwoch, 20. November 2013

La Nacion
Appeal is denied the government in the U.S. and now only the Supreme Court is left
Tuesday, November 19, 2013
By Martin Kanenguiser
Predictable, but now for that less worrisome reason: the Court of Appeals of New York yesterday denied the government the chance to review in plenary the ruling that condemned the country to pay the holdouts some US$1.5 billion.
In a brief document, the appellate judges rejected Argentina’s petition, leaving the country 90 days to file its appeal before the U.S. Supreme Court to see if the decision that favored in blunt form a pair of vulture funds and 13 small investors.
The deadline for firing this last bullet – the Supreme Court already preliminarily rejected the case, awaiting this step that the Court of Appeals took yesterday – could take another 60 days if the government asks for it, said sources that follow the case.
The attorney for the fund NML-Elliott Ted Olson celebrated the decision, which also covers the petition for review by the funds Fintech and Gramercy.  “The unanimous rejection by the Second Circuit to these petitions for a new hearing shows that the arguments from Argentina that it cannot keep its promise to the U.S. investors and obey the laws of this country are based solely on speculations and hyperbole,” Olson said.
About the chances that the highest court will accept the case from Argentina – which would give the government more time to avoid a default – the experienced lawyer argued that “the Supreme Court previously rejected the Argentine appeal and the decision of the Second Circuit only reinforces the idea that Argentina’s complaint doesn’t guarantee the Supreme Court’s attention.”  The Economy Ministry didn’t respond to questions from LA NACION on this issue, but economic authorities knew that it was highly unlikely that the Court of Appeals would accept this recourse to review in plenary (and not only the three judges that issued the ruling that upheld at the same time the sentence of Judge Thomas Griesa against the country).
On August 23, the judges found that Argentina had to pay 100% and in cash.
Attorney Marcelo Etchebarne, partner at the firm of Etchebarne, Kelly & Dell Oro Maini, said that “this is not a surprise” and explained that “Argentina has 90 days to appeal and could ask for an extension of 60 days.”  The attorney warned that “it could be that the extension is granted, but without the stay for the additional period,” by which the ruling would have to be executed that orders the country to pay this group of holdouts.  At the same time, says Etchebarne, “the plaintiffs would have 60 days to respond; in 30 more they could issue the amicus of the U.S. government and then the Supreme Court could ask for the opinion of the solicitor general, something that it didn’t do with the rejection of the previous appeal.”  If it doesn’t solicit this opinion, he concluded, “ it’s possible there will be a rejection in mid-2014, perhaps in the conference of the Supreme Court in September” of next year.
Marco Schnabl, partner at Skadden, Arps, Slate, Meagher & Flom LLP, said from New York that “the ruling of the court was totally predictable; it remains to be seen in April or May what happens with the case; until then, the stay remains in force and the payments to the bondholders that entered the swaps can continue being made.”  As such, Eugenio Bruno, partner of the Garrido firm, recalled that the Supreme Court decided not to take up a previous appeal, about the underlying question (of pari passu, by which it was found that Argentina violated the rights of the holdouts by not paying them, despite their not wanting to enter the swaps of 2005 and 2010).  “I always thought that there is a federal question for the Supreme Court to take the case, like it should take the case based on diplomatic relations of a sovereign country, but until now the U.S. judiciary has been negative with the country,” he said.
Both Bruno as well as the investment fund Gramercy proposed solutions for Argentina to not fall into default; with the changes in Cabinet announced last night, it remains to be seen where the plans for normalization of these debts end up, under the restructuring unit created by President Cristina Kirchner under the mandate of Hernan Lorenzino, who resigned.  
Ambito Financiero
Vultures: U.S. court rejects Argentine petition (only the Supreme Court remains)
Tuesday, November 19, 2013
A U.S. Court of Appeals rejected a request from Argentina for all the members of that court to review a sentence that demands the country pay US$1.33 billion to the vulture funds.
The Court of Appeals for the Second District (sic) of New York denied the request of the Argentine government for the plenary of that entity to reconsider the decision of August 23, in which three members ruled in favor of the vulture funds.
The government had asked that the 13 members of the court – and not only the three that ruled – take up the recourse, in a special procedure called “en banc”.
Strictly speaking, the possibilities of the team led by Hernan Lorenzino – until yesterday, minister – and the law firm that represents the country to obtain a favorable sentence were almost zero, but in this way they gained time in the hard battle with these organizations.
Period of 90 days  
Now it is expected that this resolution also takes a period of 90 business days before the U.S. Supreme Court, which for now has not decided whether to take the case while waiting for the finalization of the process of all the rounds linked to the complaint from the funds.
The speculation is that the high court decided to leave the case in “stand by”, until such time as this second part of the case that the vulture funds filed against Argentina arrives.
In that whole process, the government is waiting to put into action the third debt swap already approved in Congress and awaiting the support of American President Barack Obama.
There even exists the possibility that local officials will initiate efforts before the U.S. Securities and Exchange Commission and the European government.
Overall, this new ruling was considered by the market as a triumph for the creditors led by the funds NML Capital Ltd, a unit of Elliott Management Corp., and Aurelius Capital Management.
[NOTE: The above article was a wire story by Noticias Argentinas (NA) which was published in today’s editions of El Cronista and Ambito Financiero]
Lorenzino leaves Economy and will be focused on the debt
He will also be proposed as ambassador before the European Union
Tuesday, November 19, 2013
by Tomás Canosa
“I want to go”, Hernán Lorenzino had said in April when a Greek journalist asked him about inflation.  If the desire of the attorney effectively was to leave the Palacio de Hacienda, yesterday he got what he wanted because the ex-finance secretary, and now ex-Economy minister, will be in charge of the Executive Unit for Restructuring of Debt.  If the Congress approves his nomination, he will also be ambassador to the European Union.  
Lorenzino took over as minister on December 10, 2011, and only Amado Boudou and Roberto Lavagna remained in front of the Palacio de Hacienda longer than him.  Before assuming the post of minister he’d been secretary at Finance, Argentina’s financial representative in Washington and Director of Finance for the Province of Buenos Aires, among other posts.  Having gotten his law degree from the University of La Plata and with two post-graduate degrees, now he will be in charge of debt restructuring and Cristina Kirchner will send his nomination for him to also take over as ambassador before the European Union.  Up until last night at the Ministry, they had no information about the functions of this unit.
Lorenzino’s agenda, since he took the job as Minister, was concentrated in international issues and in debt: the negotiations with the World Bank, with the IMF, and the Paris Club.  The official was seen as satisfied during recent weeks because he had reached a settlement for paying the debts with the ICSID and in his inner circle they assured that there has been progress in the negotiations with the Paris Club.  It remains to be seen if Axel Kicillof will continue partially with this more “pro-market” agenda that Lorenzino initiated or if he will abandon it and prefer another path.
Lorenzino, according to what this newspaper could find out, learned of his exit yesterday afternoon and twice went from the Economy Ministry to the Government House to meet with the inner circle of the President.  The official had participated yesterday afternoon in the meeting at the Foreign Ministry together with Mercedes Marcó del Pont and at that moment it was not decided that he would leave his post.  Shortly before 8:00 pm, Lorenzino met with a group of advisors and told them he was leaving his job.  While Lorenzino has fluid ties with Guillermo Moreno, for whom he says he has a personal and professional appreciation, the same is not true with Kicillof, with whom differences were growing over the course of the months.
El Cronista
Lorenzino will remain in front of the debt negotiation
The until-now chief of the Palacio de Hacienda achieved his desire of “I want to go”.   He is rewarded with what he knows how to do most: negotiate the debt and with the embassy of Europe
Tuesday, November 19, 2013
EL CRONISTA Buenos Aires
Hernán Lorenzino will remain in charge of what in his restricted management was perhaps his main stronghold. Run out of the highest power at the Palacio de Hacienda, his functions are now relegated to continuing with the negotiation for the restructuring of debt that is in default. According to the brief announcement by the Secretary of Public Communication, Alfredo Scoccimarro, the until-now Minister of Economy will spearhead a new entity called the Executing Unit of Debt Restructuring and will be nominated, in addition, as ambassador to the European Union (EU).
Thus, the lawyer and master in economics, and native of Puerto Madryn, will continue with the work that he had been directing in recent months: negotiate with vulture funds who are suing Argentina over a claim of US$1.3 billion, which could put in checkmate several billions in hard currency that the Central Bank (BCRA) has in its coffers and that are already in decline (this year they’ve fallen by more than US$ 11 billion).
One of the latest developments in this regard, while the third edition of the exchange is coming together in the next few weeks, is the offer from the Gramercy investment fund proposed by the government and that the former Minister is following closely. The proposal from the main holder of normalized Argentine debt, along with other private creditors, seeks to convince the rest of the bondholders with exchange bonds to give up part of their interest (they speak of between 10% and 20%) which they should collect over the next five years, into a common - a trust - fund, with which a bonus will be paid to the holdouts to improve the Argentine offer, which consists of the reopening of the swap. That would involve all the debt in default, estimated at US$6.5 billion, but that could turn into about US$17 billion if creditors sue and get sentences similar to the one obtained by the fund NML Capital, of Paul Singer, in two instances. Hence, the urgency and the continuity of Lorenzino in the issue. As reported by El Cronista in past editions, according to the proposal by Gramercy and other funds, that solution would improve the price of Argentine bonds, so that bondholders would recover the money they would give up to the vultures and they, at the same time, would gain more value.
The economic team of the until-now Economy Minister - which will now depend on the formality of the man who was his subordinate, Axel Kicillof- will monitor the step-by-step of this negotiation, although it is not participating in it.  But in addition, Gramercy presented to Lorenzino a comprehensive plan to normalize the country's financial situation. Adding to the proposal to the holdouts, the investment fund added its efforts to settle contrary decisions in ICSID for about US$500 million. Gramercy bought two of the five lawsuits (Continental Casualty Company and Blue Ridge) and advised the owner of another (Vivendicon Aguas del Aconquija). It also recommended the acceleration of negotiations with the countries of the Paris Club. The former Minister will continue to lead all these issues.
Lorenzino took full control of Economy at the end of 2011, from the hand of Vice President Amado Boudou, precisely because of his expertise in restructuring debt. And it is that the official was one of the key names in the second segment of the swap of the external debt. Today, the fire power that took him upwards two years ago is landing him in front of a simple financial unit.  
New task for Lorenzino
Tuesday, November 19, 2013
The cabinet changes included the creation of an Executing Unit for Debt Restructuring, whose head will be the until-yesterday Economy Minister, Hernan Lorenzino, who also will be proposed as ambassador to the European Union.  Among the fronts to resolve by the official there is the negotiation with the vulture funds that didn’t accept the swap, the unpaid debt with the Paris Club and the pending complaints in the ICSID.
·         Vultures. The ruling in favor of the vulture funds in the Court of Appeals of New York carried the government to evaluate different strategies for avoiding default, as, while the decision of the U.S. Supreme Court remains, the chances to reverse that decision are low.  On August 26,  Cristina Fernández de Kirchner announced the sending to Congress a bill to open the debt swap for the third time, which was already approved, and also offered the 93% that entered the swap the possibility of replacing their bonds with new ones in the same currency, amount, maturity and interest rate, but that they would be paid in Buenos Aires to give an additional guarantee.  This second alternative is available, but still has not moved forward because a group of holdouts that did enter the swap is negotiating with the vultures to buy their bonds in default and then deliver those bonds to the national state, in the framework of the swap that was opened this year.  The holdouts would have to give up its pretension to want to collect 100%.  The difference regarding the haircut that will have those papers to enter the swap will be paid by this group of bondholders through resigning part of the interest of their restructured bonds.  The strategy predicts that the initial loss by the bondholders will be more than compensated in the future by the rises in bond prices.  Lorenzino will be in charge of monitoring that negotiation and exploring other options.  
·         Paris Club. The normalization of the debt with 19 countries that make up the Paris Club, among which are the main European powers, will serve to promote private investment in the country.  The payments were interrupted in 2002 and since then various times the negotiation never ended up closing a deal.  After the country completed its first debt swap in 2005 and the IMF was paid in December of that same year, the negotiation formally began.  In November 2006, then-Economy Minister Felisa Miceli sent a letter to the entity where she made clear the intention to negotiate, but the Club demanded debtor countries to present a debt sustainability scheme and the commitment to adopt policies that ensure repayment on time, in the framework of an agreement with the IMF.  The government rejected that demand and there was no progress until September 2, 2008, when the President announced she would pay the entire debt with reserves from the Central Bank.  Then, the explosion of the international crisis and the worsening of credit difficulties around the world led to Argentina postponing the decision.
·         ICSID. Lorenzino closed a deal last month with five foreign companies that had demanded US$677 million in the ICSID, but there are still pending complaints left.  Fifty five of the lawsuits that Argentina had to confront in the ICSID after the exit from convertibility.  There were six holding petitions of dismissal, 19 were abandoned or were closed with agreements with the parties, and 6 that were finalized in favor of the state.  At the same time, 16 are in process and 8 lawsuits obtained rulings against the state.  Among those 8 are the five that the government paid.  
El Cronista
Changes in the cabinet: the City speculates on a split currency but without changes in the economy
Tuesday, November 19, 2013
Changing something to change nothing.  This is, in large measure, the quintessence of the message that economists, traders and analysts concluded, in the first minutes after hearing the announcing of the change of ministers in the Cabinet.  The arrival of Axel Kicilof at the Economy Ministry added, at times, some doubts in some: deepen the model just when it has to be changed?
In turn, the exit of Marcó del Pont from the BCRA seat and her replacement with Juan Carlos Fábrega, head of Banco Nación, launched an unequivocal sentence: the debates have ended in the government, a sensible man has arrived.
In the economic and financial universe, and on the plane of the first actions that they could take, some even arose to speculate on an imminent “light” measure for the collapse of dollars that the economy is suffering.
The betting is on a split currency rate – in detriment of a deepening of the currency clamp that Marco del Pont was asking for – with a rate for the commercial dollar and another for tourism, luxury items, etc.  And on prohibitions for hoarding dollars, nothing.  “Everything will continue the same,” they say.
"The changes show that the circle of power has closed, which the new officials being Cristina’s soldiers and that the decisions always will continue going through her, which means that there will be no sudden changes in economic policy,” said Aldo Abram, director of Fundación Libertad y Progreso. In this sense, the economist dismissed a high impact in the market.  “I don’t see us having a drastic change of outlook, which means it’s likely that the timing will be stretched out with some measure to ensure an orderly transition, but nothing more,” he added.  
In tune with him, Gustavo Quintana, trader at PR Corredores de Cambios, argued that “the market, and especially the parallel market, shouldn’t feel pressured, as it is because with Kicillof at Economy the chances grow of a split dollar exchange rate, as well as the lack of pesos that exists currently is due to December approaching and with it the need to pay worker bonuses.”  
Another trader who asked for anonymity argued that “it’s very good news that Fábrega is arriving at the Central Bank, he is respected and has a pro-market vision if you put him next to Kicillof.”  
Diego Ferro, partner at Greylock Capital Management in New York, argued that “evidently, Lorenzino, by more than having a limited role, showed a favorable comportment towards the market and was the official that was best viewed.  It’s difficult for Argentina to receive dollars if it doesn’t resolve the issue of the holdouts, but with Kicillof, it isn’t clear what his expertise is.”  In terms of the BCRA, Ferro said that “the Central bank at this point doesn’t exist, so the exchange rate is quite irrelevant while the change in Economy is a concern if it means a shift with regard to the swap.”  
Another trader also arrived at the same conclusion: “Boudou and Lorenzino believed in a market solution.  With Kicillof, if one sees it as a reward, it doesn’t end up being clear for me that they’ve come out well; he is more ideological, we don’t know what practice he has.”
At the time of putting a number on the market for the blue dollars, everyone is cautious.  The mother of ideas was that it remains to be seen what measures are taken, as the changes alone don’t seem to be much.
* With the collaboration of Sofía Bustamante and María Elena Candia

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