La Nacion: “The U.S. Supreme Court begins to take up the Argentine case and the government seeks to gain time”
Ambito Financiero: “Vulture saga: the U.S. Supreme Court takes up lawsuit today”
Infobae: “Case of the holdouts in the U.S.: the government seeks to reach the end of 2014 without a sentence”
Telam: “U.S. Supreme Court decides if it takes the appeal against Judge Griesa’s ruling”
La Nacion: “The debt, in a debate of economists and candidates”
OTHER NEWS ITEMS:
· The first part of another one-on-one interview with Cristina aired yesterday, this time with pro-Massa journalist Jorge Rial. In it, she told of Nestor’s last night alive with her in Santa Cruz, where they saw a TV program about her possible campaign for re-election in 2011, and Nestor said “Even if you’re polling at 80%, I’m still running,” noting he was to be the candidate that year. She also said they differed over presidential candidates in 1991 – she was for Menem, he was for his rival. She also denied there is a currency clamp on Argentines wanting dollars to travel abroad, noting: “You have no idea how many Argentines I just saw in New York.”
· The major news story this morning is that Ricardo Echegaray, the head of AFIP, said in an interview yesterday that Guillermo Moreno’s capital amnesty program – which expires today – “did not have the expected results” and that he and his agency recommended to Cristina that it not be extended. Cristina must decide today whether to extend it. AF reports that Moreno, with Axel Kicilof’s backing, told Cristina on Friday that the Cedin in particular is not a failure, deserves another chance, and wants a post-election re-launch of the instrument “with massive official propagandistic support” in order to reach US$1 billion for the program by December.” He argues it will pick up “after the noise dies down” from the election, and is an effective tool to contain the “blue” dollar rate.
· Telam reports on an event in Buenos Aires marking the 95th anniversary of the AmCham there, where the U.S. Embassy’s business attache, Kevin Sullivan, highlighted the “very strong commitment from the U.S. private sector with Argentina” on trade, pointing out the Chevron deal with YPF, and saying that American companies “see a good future and are here to stay.”
· AF reports that Argentine companies want to “copy” YPF’s recent debt bond issuance on the international markets, which was guaranteed by an offshore trust generated from export revenues, supported by a new BCRA rule allowing such operations. The scheme, designed by HSBC an Citibank, has attracted some local companies and even some provinces who want to access the international markets “without risk.” The YPF operation brought an 8% interest rate (7.5% plus Libor), and brought in US$150 million.
· La Nacion reports that public employment in Argentina has grown 30% since Cristina took office.
TRENDING TOPICS/ARGENTINA on Twitter:
· No political topics are trending this morning.
The U.S. Supreme Court begins to take up the Argentine case and the government seeks to gain time
Monday, September 30, 2013
By Martin Kanenguiser
The U.S. Supreme Court will begin to take up the case that Argentina lost in two lower courts against a group of holdouts, with low chances that it will be immediately decided, by which the government could gain time while the ruling is not executed.
The plaintiffs, the vulture funds NML and Aurelius and 13 Argentine retail investors, believe that, sooner or later, the high court will dismiss Argentina’s appeal over the forcefulness of the previous rulings on the issue of pari passu.
However, they admit that, with the different appeals and likely intervention of the American government, Argentina could gain up to a year. For this reason, they remain open to listening to an intermediate offer between the swap offered by the government and the 100% that the court ordered to be paid to them, but that they cannot collect over the difficulties in attaching sovereign assets.
The attitude of listening, according to what LA NACION could learn, includes the possibility of reaching an agreement through a third party, like Gramercy or Fintech, who buy the debt from them at a “reasonable” price, in exchange for some additional favor from the government, like was led to be understood a few days ago by the owner of the latter fund, David Martinez.
For the vulture funds, the government will have to take advantage of this temporary window to negotiation until the U.S. Supreme Court decides to take the case or not, because they believe – like the majority of the attorneys that follow the case – that it will end up upholding the ruling against the country. If it waits until that time, it will have to pay the 100%, as Griesa ordered and the Court of Appeals upheld, they say. LA NACION wanted to know the position of the Economy Ministry about this question, but got no response.
Attorney Marco Schnabl, partner at the firm of Skadden, Arps, Slate, Meagher & Flom, said from New York that today’s process “will be a bureaucratic anecdote, because Argentina explicitly asked that they do nothing until the rest of the case arrives,” which remains still in the Court of Appeals. This body must decide on the petition for review from Argentina; it will possibly reject it and from that time the country has 90 days to appeal to the Supreme Court. “If the policy is to stretch out the timing to leave the issue for the next government, they will be able to do it, because the case will then be deicided in 2015,” Schabl said. The Argentine attorney said that it’s unlikely that the Court will reject taking the case in a blunt manner today.
"The most significant variable to know the Court’s strategy is if they ask for the Solicitor General’s opinion, and he has 6 months to reply. The high court asks for it in very few occasions,” he argued.
As such, Marcelo Etchebarne, partner at Cabanellas, Etchebarne, Kelly & Dell Oro Maini, also said that surely today “nothing will happen” and confirmed that “it’s highly unlikely that the case will be rapidly rejected.”
"It’s possible that the Court of Appeals will reject the en banc at the end of the year; in March the government will appeal again to the Supreme Court and in September that body will decide if it will analyze the case or not,” he explained.
The attorney said that, in order to recover from the previous judicial blows and get the Supreme Court to take the case and, also, have a chance at winning, the government will have to play the OAS card to show that “there is a federal case.” He recalled that for now for the U.S. courts, it isn’t a federal case – and as such the Supreme Court shouldn’t intervene – because the issue of pari passu is an issue of New York state law. Both Schnabl and Etchebarne said that surely Argentina will not carry out its threat to change the place of payment on the bonds, because that would mean the certain possibility of the stay being lifted.
Vulture saga: the U.S. Supreme Court takes up lawsuit today
• The high court must decide if it accepts or rejects the Argentine appeal
Monday, September 30, 2013
The U.S. Supreme Court begins today with a process of hearings where it will review a list of cases among which is found the Argentine case against the vulture funds. The debate is based on the recourse by which the government appealed the first ruling from New York Judge Thomas Griesa who found that Argentina violated equal treatment for the creditors.
The highest U.S. court could let its decision be known around accepting or rejecting the case today or over the course of a week. It could also issue no opinion around the case that Argentina faces against the vulture funds, and pronounce later on, waiting for the advance of the judicial process for the second negative ruling against Argentina that upheld a payment method that would affect the bondholders that already entered the previous swaps and are collecting. Another alternative decision that the Supreme Court could take is to ask for the opinion of the U.S. government, which has no deadline for filing its brief.
Basically, what happens today is that the Supreme Court will resume its ordinary activity after the summer recess and will hold its first hearing of many in the coming days, where it will hold closed door sessions to analyze more than 100 cases. On the Argentine issue the Court put only one aspect of the litigation between Argentina and the vulture funds on the agenda, reflected in the ruling of October 26, 2012, which argues that the government violated the equal treatment (pari passu) clause between the bondholders that accepted the debt swap and those who didn’t.
They estimate in the government that there will be no decisions on this lawsuit in 2013, while still seeing the scenario that the Supreme Court will reject Argentina’s first appeal, with the second appeal in course which is precisely the one that has a stay in place against the execution of the measure against Argentina, until the high court makes a final determination.
In parallel, the government will continue running through all legal recourses on the ruling of August 23, in which the payment method was expressed for the plaintiffs and ordered the country to pay them 100% under the Griesa formula. This is in course of the appeals process before the same Court of Appeals. The Griesa formula orders Argentina to not pay the exchange bondholders who entered in 2005 and 2010 if it does not pay 100% of the nominal debt in default to the vulture funds.
Thus, it’s up to the Appeals court to rule on this Argentine appeal, with a high probability that it will be rejected, after which the government will ask for an “en banc” review. That would be a review of a plenary of the 13 judges that if it is also rejected, will again go to the highest court.
Case of the holdouts in the U.S.: the government seeks to reach the end of 2014 without a sentence
The U.S. Supreme Court could decide this week if it takes the Argentine appeal or not. It is believe it will reject it. The state is preparing another recourse that could prolong the outcome another year. Attorneys abroad believe that there is no risk of default and that the stay that affects the debt payments will be maintained.
Monday, September 30, 2013
by: Leandro Gabin
The decision stage is beginning in the lawsuit that Argentina maintains with the so-called vulture funds. Starting now, everything depends on what the U.S. Supreme Court does or doesn’t do. The scenarios are varied and the government expects that the procedural timing will stretch out the underlying decision. Obtaining a favorable judgment is ruled out, whereupon the official strategy is to make legal filings to not undermine the payment of debt for the rest of the year and most of 2014. To drag out the execution of the sentence as much as possible is the official premise.
Today the Supreme Court resumes its ordinary activity after the summer recess. It’s the first conference of many that will be held in which it will analyze more than 100 cases. Those conference are not public hearings, but internal meetings of all the judges of the Court, similar to the mechanics of agreements from our own courts. These meetings allow debate of all the cases among the different judges of the Supreme Court.
In this framework, the Supreme Court will begin to analyze the cases that are ready for sentence ("fully briefed"). Among them is the certiorari filed by Argentina against the ruling of October 26, 2012, in which it was decided that Argentina violated the pari passu clause by continuing to pay the bonds issued in the swaps and not paying the vultures. As this case is taken up with many others, it could be that a decision won’t come on the same day but will take time, even up to next week.
The Supreme Court could make different decisions regarding the "certiorari" or petition raised by Argentina. Some possible decisions are that the Court simply would reject it, accept taking it and decide it, or say nothing – for example, because it decides, as Argentina has proposed to it, to take it up together with the certiorari that eventually will be filed after a possible rejection of the petition for review (before all the judges of the Court of Appeals and not just the three who ruled) from the decision of August 23 – and asks the opinion of the U.S. government. In this latter case the Obama government has no deadline for giving its opinion.
Whatever happens, is not expected that the decision of the Court will be known publicly on the same day but that it will take time. In any case, the Argentine government highlights that at this stage there will be no decisions that will set off or can set off a default on the debt, since its been said that the government is holding an additional appeal to the highest court. This is no small detail as there are dollar bond maturities under law New York (those affected in this judgment) over the coming months. There are Global 17 maturities on December 2 for US$47 million and on December 31 are will be payments on the Discount for another 157 million dollars. There will be no risk that such payments will end up being involved in the litigation.
Simultaneously, but in London, it will be interesting to know the thoughts of the main law firms who are following the Argentine case, who will hold an event on that day about the lawsuit what is coming from the Court. Expected to be present are Yannis Manuelides (from Allen & Overy), Steven Froot (Boies, Schiller and Flexner), Casey Reckman (Credit Suisse), Julian Ku (Maurice A. Deane School of Law, Hofstra University) and Antonia Stolper (Shearman & Sterling).
There is unanimity among the major law firms abroad that this legal process will continue for quite some time, and that the final decision of the Court (taking the next appeal that the country will file) would delay a final decision until the next session of October 2014. " Argentina has the motivation to delay the appeals process, provided it is possible and it is not likely to submit a second petition for review to the Supreme Court until the second Court of Appeals decides on its en banc application," explain the attorneys abroad.
Another not-so-minor issue is what will happen with the "suspended judgment" or "stay" in the midst of all this. The lawyers say that there is no chance that they stay will be lifted by the Supreme Court. The vulture funds, against what transpired to date, are not asking for the stay to be lifted but are seeking assets of the country abroad to pay (the process called discovery). Lawyers say that it could only be lifted when the Court takes up the second ruling against the government, i.e. the one from August 23, which will be appealed, on the formula of payment. This is part of the plan to stretch out the final ruling on the matter. At the Economy Ministry, they believe it will take a while.
U.S. Supreme Court decides if it takes the appeal against Judge Griesa’s ruling
The highest court will start today with the process of hearings, among which they will analyze the Argentine government’s appeal against the first ruling of Thomas Griesa, who found Argentina violated equal treatment to the creditors.
Monday, September 30, 2013
The highest court could let it be known today if it accepts or rejects the case, or within a week, or could end up issuing no opinion around the lawsuit that Argentina faces against the vulture funds, and could come out later on, awaiting for the judicial process to move forward for the second negative ruling against Argentina, which upheld a payment method that is affecting the bondholders from the exchange and which involves intermediary financial entities.
It could also decide to ask for the opinion of the U.S. government, where the government of Barack Obama has no deadline for filing its brief.
Strictly speaking, the Supreme Court will resume its ordinary activity after the summer recess and will hold the first hearing of many that will be held in the coming days, where more than 100 cases will be analyzed behind closed doors.
On the Argentine issue the Court put only one aspect of the litigation between Argentina and the vulture funds on the agenda, reflected in the ruling of October 26, 2012, which argues that the government violated the equal treatment (pari passu) clause between the bondholders that accepted the debt swap and those who didn’t.
The consensus is that there will be no decisions on this lawsuit in 2013, and that the scenario will still play out where the Supreme Court will reject Argentina’s first appeal, leaving the second appeal in course.
In effect, the second appeal is the one that has the “stay” in force, which impedes execution of the measure against Argentina until the highest court rules.
For that reason, market analysts believe that Argentina will not enter into any kind of non-compliance.
In parallel, the government will continue running through all legal recourses on the ruling of August 23, in which the payment method was expressed for the plaintiffs and ordered the country to pay them 100% under the Griesa formula.
This formula orders Argentina to not pay the exchange bondholders who entered in 2005 and 2010 if it does not pay 100% of the nominal debt in default to the vulture funds.
With these time frames, it is up to the Court of Appeals to rule on Argentina’s appeal before that same court of three judges, which has a high likelihood of being rejected.
After which, then the Argentine government will turn to the “en banc” petition, which is that the plenary of all 13 judges review it, and if they also reject it, it will go again to the highest court.
Within this framework, the government will move ahead with Swap III on the debt, for those who didn’t enter the previous restructurings and dropped their lawsuits, which will be open in October.
Last week, President Cristina Fernández de Kirchner called for “the need for a global market regulation for global governance,” during her speech before the 68th United Nations General Assembly.
In fact, the vulture funds are threatening Argentina in the courts of New York for 10 years, and Argentina cannot put a final point on the debt swaps due to the international legal hole for solutions for countries in bankruptcy.
"In these blessed self-regulated markets,” who get to collect sentences with 1300% gains, “where will we find businessmen that are dedicated to generating jobs or innovation, when someone buys for 40 million dollars and then gets a court ruling for US$1.7 billion?” she asked the auditorium and the Secretary General of the United Nations.
Thus, the foreign minister of developing countries in the G-77 issued a statement against the “vulture funds paralyzing debt restructurings.”
Lastly, Argentina and Ghana agreed to put an end to the arbitral process set off by the attachment of the Frigate – the lawsuit that the country won in the Hamburg tribunals – and agreed on joint initiatives to share their experiences on the threat of the vulture funds.
[NOTE: The following article was a “fact checking” piece on a debate yesterday between House candidates running in Buenos Aires city, focusing on three “facts” mentioned in the debate. The first was on debt, the other two were on unrelated local issues: sanitation and poverty rates. The debt section is excerpted below.]
The debt, in a debate of economists and candidates (Excerpt)
Verifying political messages this week
Monday, September 30, 2013
By Laura Zommer and the team at chequeado.com | Para LA NACION
In a debate on TN, three economists running for the House from the City of Buenos Aires - -Carlos Heller (Frente para la Victoria), Martín Lousteau (UNEN) and Federico Sturzenegger (PRO)- defended or criticizes the country’s course. Here, a review of three statements they made.
"Between 2003 and 2012, Argentina achieved a 73% reduction in public debt (as a percentage of GDP)” (Carlos Heller, candidate for the FPV)
When speaking on debt, what must be observed is the capacity of the debtor to pay. In that case of a country, this is measured with the stock of public debt as a percentage of its GDP, argued professor at Torcuato Di Tella University, Eduardo Levy Yeyati, on his blog.
"In debt reduction, different from the debt itself, one must always measure not in absolute, but in relative terms,” he explained.
Between 2002 and 2012, the debt burden in GDP went from 166.4% to 45%, according to the last report from the Finance Secretariat at the Economy Ministry. This data includes the debt of the national state with national agencies, international organizations, or foreign governments, and with the private sector (resident or non-resident). And the whole series comes from official debt reports.
That means that the reduction in stock of public debt as a percentage of GDP went from 121.4 points between 2002 and 2012 to 73% of the debt there was in 2002, the amount mentioned by the Deputy.
However, the statement by the candidate omits the context of this data, which compares the current percentage with the worse moment in the series (2002), the year that the government of Eduardo Duhalde overturned the Law of Convertibility and the devaluation came.
Levy Yeyati explains it this way: “It doesn’t make much sense to measure from 2002 because the number of the debt is inflated by the real over-depreciation of the exchange rate. It doesn’t make sense to compare to before and after the swap because the haircut on the debt was from the default, and is a mechanism that is not attributable to debt reduction, unless, of course, a default is defended as a voluntary economic policy. As such, the more reasonable thing would be to continue with the lowering of the debt starting with the end of 2005.”
In 2005, Néstor Kirchner paid off the debt with the International Monetary Fund (IMF). If one observes the evolution of this indicator starting that year, the debt burden on GDP went from 74% to 45%, meaning the drop that came (30 points) represents 40% of the debt there was in 2005.