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Mittwoch, 19. Februar 2014

Lead Articles: Ambito Financiero: “Vulture accepts negotiating, but after a ruling from the Supreme Court” La Nacion: “Little expectation for Argentine filing before the U.S. Supreme Court” Clarin: “Vulture funds: in U.S. they ask if Argentina could avoid another default” El Cronista: “If the Court doesn’t take the Argentine case it could generate a selective default” El Cronista: “For Barclays, the new CPI will bring international support in the case against the vultures”

Lead Articles:
Ambito Financiero: “Vulture accepts negotiating, but after a ruling from the Supreme Court”
La Nacion: “Little expectation for Argentine filing before the U.S. Supreme Court”
Clarin: “Vulture funds: in U.S. they ask if Argentina could avoid another default”
El Cronista: “If the Court doesn’t take the Argentine case it could generate a selective default”
El Cronista: “For Barclays, the new CPI will bring international support in the case against  the vultures”

Ambito Financiero
Vulture accepts negotiating, but after a ruling from the Supreme Court
• It is Paul Singer’s Elliott
• Has direct relationship with Paul Clement, adviser to Argentina.
Tuesday, February 18, 2014
By Carlos Burgueño
Paul Singer, the top dog at the NML Elliott fund, sent a direct message to the private negotiators who, in Argentina’s name, are offering a negotiated way out from the lawsuit that the vulture fund is waging against the country in the U.S. courts.  The message is that until there is a definitive ruling from the Supreme Court of that country, and until the government of Cristina de Kirchner itself publicly opens negotiations, there will be no possibility of discussing any settlement.  But if both situations occur, he is open to a consensual negotiation, provided it is with an entity like Deutsche Bank. The vulture fund is speculating, with substantial reason for doing so, that sooner or later it will get a victory in American court, and that that will be the moment to start to talk with Argentina, but in an “official” manner. 
The message was transmitted personally by telephone by the attorney that is defending Elliott before the Supreme Court, Ted Olson, yesterday at the time of filing the brief the country was delivering last night to the U.S. Supreme Court.  Olson (Republican and old defender of George W. Bush in the lawsuit from which he was named President against Democrat Al Gore), has a direct relationship with the new attorney representing Argentina, the also-Republican Paul Clement. He is associated with the law firm long-contracted by the country, Cleary Gottlieb Steen & Hamilton (CGSH) the one that wrote up the filing that went in last night to the reception inbox for briefs to the Court; but since yesterday was a holiday in the U.S. (President’s Day), the complete text of the presentation will be known today.  However, it is known that Clement’s strategy is to focus in on the systemic threat that will come to the United States from a victory for the vulture funds in this lawsuit.  According to the filing to be known today, the intention is that the judges of the court be interested in taking the case, since it would involve, according to sources in the law firm defending Argentina, “a business of more than US$40 billion in public bond placements from emerging markets on Wall Street.” 
Argentina is seeking that one of the nine justices (five Republicans and four Democrats) be interested in the case and decide to take it for the highest court to issue a ruling between September of this year and March 2015.  Cristina de Kirchner’s government knows that the possibility of a victory is distant (almost null) now that it is almost a utopic idea that the court would radically change decisions from the lower court (Thomas Griesa) and the appellate court (Court of Appeals in New York), both in Paul Singer’s favor and in favor of the other 15 litigants among vulture funds and private individuals that are suing in American courts against Argentina on the payment of some US$1.33 billion.  In the other two rounds, the U.S. courts found that the country must comply with paying that money in cash and in an immediate manner, which the country rejects even under risk of falling into technical default.  Argentina’s idea is that the Court will decide to take the case, analyze it and thus gain time to open up an extra-official negotiation through private entities with the holdouts, including Singer’s vulture fund.
For this, Argentina has two opportunities.  The brief submitted yesterday and the public hearing on April 21 where the attorneys representing the country could speak for the first time before the 9 justices of the Supreme Court and make the arguments for the court to take interest in the case and rule subsequently, even rule against if necessary.
The current strategy was put forth by the Argentine government, through the head of the Debt Renegotiation Unit that is led by former Economy minister Hernan Lorenzino, who believes that the April 21 hearing in Washington will be the last chance to convince the high court to take the case.  But if the American court finally doesn’t accept Argentina’s position, the Casa Rosada will have some more months to start a negotiation with some vulture funds.
To have to recur to this last initiative, the intention is to pay the vulture funds with public money through third parties, which would be “friendly” funds of Argentina: Gramercy and Fintech.  It is this option that Olson’s men ruled out yesterday until there is a favorable sentence in the American court and since the negotiation is not endorsed by the Argentine government.  In fact, 15 days ago, Singer himself had called the offer “bizarre” and a “stunt” in a letter to his private investors, explaining why he wouldn’t accept the negotiation proposed by Gramercy and Fintech.  Also joining this strategy in recent days were the German bank, Deutsche Bank, and UBS of Switzerland, who are also thinking of starting a negotiating scheme with the vulture funds.  According to the view from Buenos Aires, a second offer to discuss a way out of the U.S. lawsuit would be more flexible for Singer, since Deutsche Bank and UBS would be making it; last Wednesday they met with Economy Minister Axel Kicillof in the Economy Ministry.  It so happens that the head of Elliott has old resentments both with the head of Gramercy, Robert Koenigsberger as well as from Fintech, David Martínez; but he would be more willing to discuss an alternative with the European banks.
La Nacion
Little expectation for Argentine filing before the U.S. Supreme Court
Tuesday, February 18, 2014
By Silvia Pisani
WASHINGTON.- Hours were spent looking at the Supreme Court website, awaiting for the announced Argentine appeal to enter.  That was one of the tasks in the law firms of this country that are following the judicial fight between the government and the vulture funds, which is now entering its decision stage.  
"We don’t expect that there are many new arguments on Argentina’s part on this occasion.  But we are obviously attentive to the entry of that document,” said Antonia Stolper, chief for Latin America at Shearman & Sterling, one of the firms that has been following the case, to LA NACION.
All agree that the process from here forward is in a stage of crucial definitions.
"My prediction is that, once Argentina’s appeal enters, the plaintiffs will reply very quickly.  They are in a hurry now, because they feel that they could win.  For Argentina, however, it is convenient to them to play out the timing as long as they can,” she added.  
The expectation was that the document would enter, the one with which Argentina will formalize its last move before the highest court.  It wants the court to intervene on a case in which it has accumulated negative rulings in two previous rounds.
"The possibilities that it accepts it are very low,” Stolper reiterated yesterday, agreeing with other lawyers.  What is in play is not the order to pay – that was already issued and the Court rejected reviewing it – but the formula by which to do so.  
"Our bet as a firm is that the Court will not accept this petition either.  The payment formula (which Argentina rejects) is a matter for the interpretation of the court in New York.  I don’t see what can be said there by the Supreme Court, since its job is to interpret federal questions,” the expert said.
The expectation was not only over the stage the process has reached, but by the nuance that could come from the incorporation of a new attorney to Argentina’s defense team, made up by the firm of Cleary, Gottlieb, Steen & Hamilton since the 1990s.
For this round, the government hired Paul Clement, an expert on Supreme Court matters who held the public post before it during the government of George Bush.  
"He’s an expert on the Court.  But the truth is that I don’t believe that he could change what has been said up to now by much.  Argentina has already had two appeals before the Manhattan court and one before the high court.  In all of them, it had adverse rulings, I don’t see that changing much from what has been said,” Stolper said.
Another hearing
In a parallel manner to last night’s appeal, expectation is growing on the hearing scheduled for April 21 on a parallel case.
There, the possibility will be aired on the banks reporting – or not – on the existence of the country’s assets for their eventual attachment.
"It could seem that everything is the same because the actors are always the same.  So, the plaintiffs are the funds and the defendant is Argentina.  But the similarities end there.  They are different cases and I don’t see how you mix one with the other,” Stolper said.
The appeal that is expected from our country responds to a complaint put forth by the funds NML and Aurelius Management, together with a group of private investors, among them, various Argentines.
On the other hand, negotiations have been held open by financial entities and attorneys that are trying to reach a settlement between Argentina and the holdouts before an irreversible sentence comes which carries the country to a new default on its public debt.  
There is the so-called “Gramercy solution”, which is about initially dividing up some losses among investors to then gain with an improvement in Argentine bonds, which has been rejected by the vulture funds, by which its fate is uncertain.
Then there is the other one, from expert Eugenio Bruno, of the Garrido Firm, who is working with a Wall Street bank on an integral plan that contemplates the possibility of settling with all the holdouts and issuing “fresh money” for the country among its main points.  
Vulture funds: in U.S. they ask if Argentina could avoid another default
It is a possibility if the U.S. Supreme Court rejects the Argentine petition and orders it to pay those funds  
Tuesday, February 18, 2014
by Ana Baron
New York. Correspondent - Waiting for Argentina’s appeal to be presented today to the U.S. Supreme Court,  the main question is whether the Argentine government will succeed or not in avoiding a new default.
In the appeal, Argentina’s lawyers, led by great expert Paul Clement, will ask the Supreme Court to reverse the ruling that orders our country to pay the vulture funds at the same time as it pays the restructured bondholders. If this ruling is upheld and the government insists on not honoring it as it announced last year, Argentina will fall into default.
No one really knows what could happen. But there are three possible scenarios. The Court can reject the Argentine appeal flat out, it can accept it or it may postpone its decision by asking the opinion of the Obama government through Solicitor General Donald Verrilli.
If the Court rejects the appeal flat out, the judgment in question will immediately enter into force and if Argentina refuses to pay the vulture funds, it also cannot pay the restructured bondholders, since any bank that tries to help it to do so runs the risk of being sanctioned.
It will then fall into default. This is the most negative scenario.
If the Court asks the opinion of the Solicitor General or accepts Argentina’s appeal, it will maintain the stay on execution of the judgment until there is a ruling. The threat of default is on hold for at least one more year.
Beyond these scenarios, there are those who think, however, that Argentina could avoid the default by sealing an out-of-court agreement with the vulture funds through intermediary funds. There are currently two proposals in this regard.
The so-called Gramercy solution is to give up a part of the future payments of the bondholders who entered the swap to the vulture funds that didn’t restructure their bonds, in exchange for lifting the lawsuits, which would avoid the country falling into default.
According to this proposal, Gramercy, Fintech and other funds would give up about 20% of the payments that should receive in the next 5 years which would increase the official offer of reopening the swap by about US$1 billion and would make the offer more attractive for the vulture funds.
This proposal has already been rejected by Paul Singer of NML, the fund leading the legal offensive against Argentina. Singer recently called this proposal "bizarre" and "a stunt."
There is also a proposal from Eugenio Bruno to make a restructuring of the debt in default with a haircut through an exchange for new bonds with long-term maturities. This proposal provides that if the swap is made, the Argentine government would access some US $10 billion in fresh money for investments in infrastructure, energy and raising the reserves.  
The question is why NML, which has litigated for 10 years, will accept a haircut when it can get a judgment in its favor. In its appeal, Argentina will argue that the decision of the Appeals court violates the foreign sovereign immunities act and that it is unfair. But both arguments were already rejected by the Appeals court.
El Cronista
If the Court doesn’t take the Argentine case it could generate a selective default
Tuesday, February 18, 2014
by Marcelo Etchebarne – Partner, Cabanellas Etchebarne Kelly
Before the end of the month of May 2014, the United States Supreme Court might decide not to take the case. This would be the worst possible scenario if it does not request the opinion of the Solicitor General. The Appeals court ruling would remain firm and could generate a selective default on certain bonds issued in the 2005 and 2010 swaps.
If the United States Government filed a forceful amicus in favor of Argentina, the chances that the case will be sent to the Solicitor General would be high and, if it accepts it after his opinion is issued, the process could stretch until the end of 2015.
The procedural steps of Argentina v. NML on World Discovery (a case which has recently been taken up by the Court) can give us an indication on future timing in the case called pari passu.
Under discussion there is the power of American justice to obtain information about accounts and bank transfers by Argentina outside United States (discovery case).  The appellate decision was contrary to another appeals court ruling on a Federal law (Federal Sovereign Immunity Act of 1976). A typical case of interest to the Court and where Argentina could possibly win.
In the other case, access to Iran’s accounts is being sought by victims of terrorism. There it was found that the aforementioned law only allows the seizure of certain assets in a restricted manner in the United States and therefore the seizure of assets or taking similar measures (such as searching for information) outside North America would be forbidden for its judges (there could be an analogy about the effect of injunctions preventing an Argentine swap outside of United States).
Procedural deadlines in the discovery case that we summarized below are indicative of what may come in the case of the pari passu.
According to the records from PACER (Public Access to Court Electronic Records, for its acronym in English), on January 7, 2013, Argentina presented the request for appeal to the Supreme Court (writ of certiorari). NML then requested an extension until March 11, the date in which it filed its response.
On March 27, the case was distributed for analysis at the conference on April 12. Three days later, the Solicitor General was invited to give his opinion, which he delivered on November 22.
For its part, the Government of the United States filed an amicus brief on December 4. Then, on December 18th, the case was distributed to be discussed at the January 10, 2014 conference, at which it was granted certiorari. Finally, on February 11th the hearing of parties before the Court was set for April 21.
In the case of pari passu, after Argentina’s appeal before the Supreme Court, the plaintiffs will ask for an extension and would respond in mid-April (they could surprise everyone and reply sooner).
On the other hand, at the end of May or early June of 2014, the Supreme Court will be able to issue the first decision on the case: to take it, reject it or ask for an opinion from Donald B. Verrilli, the Solicitor General, who could take until January 2015 to give his opinion. Two months later, it could accept or reject the certiorari. If the Court takes the case, it would rule on it by the end of 2015.
But the pari passu case has proven to be an atypical one and can still give us a surprise. The bankruptcy petition by Detroit has been filed, from which interesting conclusions can be drawn. Or perhaps the Court decided to take other types of measures applicable only to this case that is delaying the process.
But the most relevant thing for predicting the future is subject to the role that the United States Government will play, and the brief that Argentina will file in the coming days. Meanwhile, the best prognosis is broad: between two and twenty months for the case to be resolved in the Supreme Court.
El Cronista
For Barclays, the new CPI will bring international support in the case against the vultures
Tuesday, February 18, 2014
On Wall Street they received as very positive news the new price index released by the government last week, which will facilitate cooperation with the G20 countries and the multilateral institutions, such as the International Monetary Fund (IMF) and the Inter-American Development Bank.
Thus said Barclays, for whom a credible CPI will mean improved relations with the IMF and will open some doors for Argentina, like international support in the case of pari passu. Although the investment bank makes clear that this point is not too clear, the government could obtain the support of other countries and multilateral organizations in the litigation is has maintained against the holdouts.
The IMF and the United States Treasury Department took a step back in their support for Argentina in an earlier order of certiorari in June 2013. However, the resolution of claims before the ICSID claims and the start of negotiations with the Paris Club could help, according to Barclays, to restore the support of the United States Government and the IMF.
"Although the effect that the fulfillment of these long-standing international demands would have on the litigation is not too clear, we believe it will lessen the argument of a debtor which was always a negative point for Argentina in the courts and which would increase the likelihood of an amicus from other governments and multilateral bodies," said a recent report by Barclays.
According to the bank, more precise statistics would bring the country closer to an article 4 of the IMF, where Argentina needs its participation to reach a restructuring agreement with the Paris Club. In addition, the improvement in relations with multilateral creditors could unlock votes at the World Bank, which would mean new loans approved by the end of this year. "This is within our forecasts and should not change our point of view about the situation of the reserves," warned Barclays.

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