Calling on Argentina to make an offer to agree with the holdouts
Saturday, November 30, 2013
By Martin Kanenguiser
American Task Force Argentina (ATFA) said that the government will not manage to avoid a new default if it tries to delegate to private investors the possibility of reaching an extra-judicial agreement with the holdouts that have already won a judgments in two levels of the courts.
One of the heads of ATFA, which represents groups of American investors affected by the default of Argentina in 2001, ex-ambassador Nancy Soderberg said in an interview with LA NACION from Washington that the new debt swap doesn’t have much prospect of success. And she denied that the country is showing greater willingness to pay; on the contrary, she said it continues to try to elude judicial rulings in that country.
-Don’t you believe that Argentina again showed a willingness to pay by suspending the lock law and deciding, once again, to reopen the swap to the holdouts?
-No, we don’t see willingness; Argentina has repeatedly refused to respect the judicial progress of the United States. In fact, in the announcement of reopening the swap it included a pretension to evade the New York courts.
-Do you believe the investors will participate in this new swap?
-We can’t speak for the investors, but I would ask myself why any investor would change his bond with New York law for another with Buenos Aires law.
-Some attorneys specializing in debt believe that the bondholders could win many cases in the U.S. courts, but they will not be able to collect because Argentina has no attachable assets abroad. Do you agree?
-It’s in Argentina’s best interest to come to agreement with its creditors. The country, its provinces and its companies will save billions of dollars if it achieves this. For this reason, we believe that, in the last instance, there will be an agreement. But this requires Argentina to sit down and negotiate with its creditors, something until now it has refused to do.
-Do you support the negotiation initiated between a group of bondholders that entered the swap, making up the Exchange Bondholder Group, and the holdouts, to avoid an Argentine default if the Supreme Court rejects taking the pari passu case?
-Argentina must be the one who takes the responsibility for its debts. It has to come to the table and negotiate. It’s a requirement to achieve any successful agreement.
-Do you believe that the holdouts and the bondholders that entered the swaps should share the losses to reach an agreement?
-It’s up to Argentina to negotiate. The bondholders that entered the swaps are not the ones responsible for this debt, nor do they have the capacity to close a deal by themselves. The whole notion of an agreement between private parties is not based in reality. Only Argentina can reach an agreement.
-Don’t you believe that the funds like Gramercy and Fintech have a better attitude than NML and Elliott for finding a solution?
That is a subjective and immaterial question. NML and Dart have rights in terms agreed to under the contracts that Argentina offered when it issued its bonds. The “attitude” is not a relevant factor in legal questions.
-The government is taking notice of its restrictions on financing itself only with reserves. Do you think it could finance itself again on the capital markets at a low interest rate?
-Yes, absolutely; but only if it first settles with its creditors. Only after that step will it have access to that financing.
-You sent letters to the ambassador to Washington, Cecilia Nahon, for the government to negotiate. Did you receive a response?
-Ambassador Nahon refused to meet with us, or with the creditors. We would welcome the chance to meet with her.
Soderberg, who held high diplomatic posts in the Clinton administration, leads ATFA with another ex-official on that Democratic government, Robert Shapiro. However, they also have wide support in the Republican Party and the Obama government admits that it has been key for the U.S. Congress to promote financial and trade sanctions against Argentina these years.
Debt unit is created for Lorenzino
He will be in charge of the restructuring of the debts in default
Saturday, November 30, 2013
Former Economy Minister Hernán Lorenzino managed to crystallize yesterday his consolation prie with the presidential decree that created the Debt Restructuring Unit in his charge.
The former Minister, who yesterday held meetings at the Central Bank, will be accompanied by former Secretary of finance Adrian Cosentino.
Lorenzino aspires in addition to have the Senate take up his nomination as an Ambassador to the European Union in December, said sources close to the former Minister, displaced last week, both from his post as well as from his office that he’d been assigned in the Palacio de Hacienda.
Through Decree 1935/2013, published yesterday in the Official Bulletin, it was indicated that the unit will "assist and advise the Minister of Economy and Finance (Axel Kicillof) in determining the objectives and policies related to the restructuring of the public debt.” In this way, Lorenzino will go from being Kicillof’s boss to being his subordinate, to "participate in negotiations that are inherent in the credit aspects of financial policy and the external debt of the Argentine Republic with foreign, multilateral, public or private financial bodies and organizations." This function, which he will carry out"ad honorem" - in contrast to his position as Ambassador - will allow him to "fully carry out the actions needed to continue with the renegotiation and restructuring,” it added. In addition to the question of the bondholders who are suing over their bonds in default, the unit will also be responsible for formulating a payment plan for the Paris Club.
Attorney Eugenio Bruno, who has started a negotiation with the holdouts, said that “the negotiation with the holdouts is advancing well, by the active participation of the leading groups that are part of the committee of creditors of restructurings, like Greece and Ivory Coast, and leading global investment banks.”
Lorenzino will now have to report to Kicillof
He was confirmed in heading a debt negotiating unit.
Saturday, November 30, 2013
by Tomás Canosa
The government has designated the former Economy Minister, Hernán Lorenzino, and ex-Finance secretary, Adrián Cosentino, to be in charge of carrying forward negotiations on Argentina’s debts with international financial organizations, like the IMF, the Paris Club and the vulture funds.
They will depend upon and will have to report to the current minister, Axel Kicillof.
When presidential spokesman Alfredo Scoccimarro last week announced that Kicillof would take over as minister, he also said that there would be set up a Unit of Debt Restructuring that would be led by Lorenzino. Decree 1935 which was published yesterday in the Official Bulletin, created this new agency, under the orbit of the Palacio de Hacienda.
This unit, which will operate in the annex building of the Ministry, will have as a central function "to assist and advise the Minister of Economy and Finance in the determination of objectives and policies related to the restructuring of the public debt.” Lorenzino will be the head of the unit and hold the rank of Secretary, although he will not collect a salary because he will be the Argentine Ambassador to the European Union. Cosentino, who surprisingly left his post as Secretary of Finance, will be the Coordinator of this new unit and have the rank of Undersecretary. The new unit will also pull together a portion of Lorenzino’s loyal staff who left their posts to be occupied by people close to Kicillof.
Lorenzino and Cosentino will carry out the daily negotiations with the Paris Club, the vulture funds and the IMF, but it will be under "indication by the Minister". "The Minister has the final word always,” said a source close to Kicillof.
The government advanced in recent weeks in talks with the Paris Club and Lorenzino said alone to his advisers that the government could reach an agreement in the coming months. The Lorenzino-Cosentino tandem will also have the challenge of the lawsuit against the vultures ahead of them. The same day that it was announced that Lorenzino would abandon the Economy Ministry, a United States court rejected an petition from the government and now all that is left is one final appeal to the Supreme Court to see if it takes up the Argentine case. Even the fund Gramercy began drawing up a scheme to have the bondholders who entered the exchange give up a portion of their income to the vultures. Thus, they would stave off a plunge in bonds and would undo the lawsuit.
Asking the UN to review the debt with the Paris Club
Saturday, November 30, 2013
by Patricia Valli
A United Nations rapporteur that is a specialist in debt yesterday finished his visit to Argentina with the recommendation to audit the debt contracted by the dictatorship and other “odious” debts.
Invited by the Argentine government, Cephas Lumina, expert in the effects of external debt on human rights, expressed his support for the official strategy of not yielding to the vulture funds but, about an analysis of the Argentine debt stock he indicated that “questions arise about the legitimacy of the debt.” Among the most questioned points one finds loans to the last military dictatorship. Part of these loans are integrated into the unpaid stock of debt with the group of creditors in the Paris Club, which the Executive is trying to renegotiate these days.
The government is seeking to reactivate an agreement to pay off this debt and reopen trade credits from central countries making up the Club. But Lumina estimated it is necessary to review – to audit – the debt “before concluding any negotiations,” according to what he explained to PERFIL in an interview.
From his point of view, the payment on a debt contracted by a regime that didn’t follow the will of the people can be rejected. “To help finance infrastructure that was used to subjugate the Argentine people,” Lumina recounted, who for two weeks met with officials from Finance, the Foreign Ministry, Social Development, the Supreme Court, the CGT and civil society, among others. Inside the government, the reception of the idea of an audit was different.
“What there is here is a willingness to take up the debt issue in a decisive manner,” Lumina said at the UN office in Buenos Aires.
The expert also touched on other issues. “The fight against poverty is long-term and requires much investment,” said the rapporteur, who said one of the pending challenges is social inclusion and took note of the debate over poverty indices in the base of the consumer price index (CPI) of INDEC, interfered with by the government in 2007.