Clarin
Vultures: a “friendly” fund also appeals before the U.S. Court
Friday, February 21, 2014
by Ana Baron
In
a gesture of support for Argentina, Gramercy, a "friendly" vulture
fund, filed its own appeal Thursday to the U.S. Supreme Court requesting
it reverse the ruling that prevents the government from paying
bondholders who entered the swap if it doesn’t pay the holdouts in the
conflict.
The
so-called Exchange Bondholders Group run by Gramercy argued that the
decision not only violates the Foreign Sovereign Immunities Act but also
violates the Fifth Amendment to the U.S. Constitution, an argument that
lawyers who filed the Argentine appeal didn’t use. The Fifth Amendment
protects private property. Gramercy believes that by preventing
Argentina from paying the funds that entered the swap if it does not pay
the holdouts, the ruling in question violates this amendment.
All
the analysts consulted by Clarín say that the likelihood that the Court
listening to this appeal is almost nil. They claim that if it chooses
to listen to anyone, it will be Argentina.
In
any case, Gramercy’s appeal adds arguments in support of Argentina
while it continues insisting on an out-of-court proposal. Indeed,
Gramercy proposed to bondholders who entered the swap to cede to the
vulture funds, led by NML of Paul Singer, part of their interest
collected periodically. To achieve that, the planned solution has added
that the government would not need to change its hard line against the
vultures that it has maintained until now.
Paul Singer, however, has already rejected this proposal. He said that he is willing to negotiate, but only with Argentina.
What
can happen from here forward? At the judicial level, all those who want
to submit amicus curiae briefs, i.e. a letter on behalf of the
Argentine appeal, have 30 days to do so. The big question is if the U.S.
will do so or if it will wait for the Court to ask for its opinion.
The
vulture funds also have 30 days to respond to Argentina’s appeal.
However, they are likely to request an extension of 30 days to read the
briefs submitted on behalf of Argentina before filing their response.
That means that the Court would then be in a condition to decide what
to do in May or June. But before it makes that decision, if the U.S. has
not filed an amicus curiae, the Court could decide to ask for its
opinion, and if so, the U.S. has up to 6 months to file it. That would
mean the entire process would take until 2015.
Telam
Bondholders that entered the swap appeal before the U.S. Supreme Court
Friday, February 21, 2014
The
group of bondholders that entered the restructuring, called the
Exchange Bondholder Group (EBG) -led by Gramercy Management- joined
the petition made by Argentina on Tuesday before the U.S. Supreme Court.
The
petition for 'review' has the objective of "remedying the enormous
damage that imminently threatens third parties as a result of the
judicial orders,” explained the bondholders.
These
rulings, as detailed in the document that Telam had access to, "pose
fundamental issues of national importance in connection with the correct
scope of the equitable power of the federal judiciary, and
constitutionally, by endangering the interests of private ownership of
some citizens, for the private benefit of other.”
The
decisions referred to in the petition are those issued by Judge Thomas
Griesa first, and then the Court of Appeals for the Second Circuit,
which established a method of payment to the holdouts for an amount
close to US$ 1.330 billion.
The
payment formula includes the use of funds allocated to pay the
bondholders who had decided to enter the swaps in 2005 and 2010, as
represented by the Exchange Bondholders Group.
Under
this scenario, the Group argued that the petition - filed on Tuesday,
the same day that Argentina filed before the Supreme Court in Washington
- "raises an issue of national importance" under certain clauses of the
Fifth Amendment of the U.S. Constitution.
In
this regard, the members of the group wrote in the brief of 32 pages
and 65 appendices that they "have constitutional rights that protect
them from government actions that take control of their assets for the
benefit of other private citizens.”
Thus,
"these violations of the constitutional rights of non-parties
underlines the reasons to grant the request" to the Argentine Republic,
the representatives of the EBG wrote through a petition for a special
recourse known as "writ of certiorari".
The
bondholders claimed in turn that "the threat of severe losses to third
parties is part of the attempt by the orders (of the appellate court) to
force Argentina to pay" bondholders who didn’t enter the 2005 and 2010
swaps "in violation of the Law of Sovereign Immunity of States".
In
the section called "the orders ignore an indisputable injury" to
bondholders, they held that "it is not Argentina but the District Court
which is taking the concerned third parties hostage."
"There
was no threat of injury to the EBG until the District Court issued
unprecedented orders aimed explicitly at their property" with respect to
all the country’s debt, which are being used "deliberately as a lever
against Argentina" by attempting to circumvent the law of sovereign
immunity of States (FISA).
In
this case, the brief concluded, "it is the courts, not the defendant,
who have threatened the third party Exchange Bondholders and their
assets.”
Putting
in writing their "support" to the petition for granting of
extraordinary appeal by Argentina on Tuesday, the Group said that
granting a hearing to the case before the Supreme Court will serve
"another highly pragmatic purpose.”
The
rulings issued by lower courts in Manhattan, "if they are not modified,
threaten the stability of billions of dollars in existing sovereign
debt restructurings,” adding that to date Argentina "has honored fully
its obligations.”
There
exists, also, "an overwhelming political and academic consensus that
voluntary restructurings of sovereign debt of this kind are fundamental
to the stability of the global economy," they concluded, referring to
the amicus curiae (friends of the Court brief) that the government of
France filed long ago.
Infobae
Kicillof in private: admits problems with inflation and the dollar, but speaks of a stabilization plan
The
minister is optimistic. He aspires to reaching June without new
problems in the exchange rate, which will remain at 8 pesos, and in
prices. The Paris Club, holdouts and public spending, in a snapshot of
the officials ideas.
Friday, February 21, 2014
by: Leandro Gabin
The
government is taking a turn that is unexpected for some. The economic
issues and the financial agenda have come back perhaps like never
before. The team led by Axel Kicillof is showing its cards to those who
want to listen in the midst of certain tranquility after the soaring of
the dollar. The changes from the minister, towards pragmatism despite
the rhetoric, are notable: he went from applauding and boasting of the
expropriation of Repsol’s shares in YPF to leading the negotiations to
close a deal in an imminent manner.
Not
only that, Kicillof and his Finance Secretary, Pablo López, are putting
out a clear line for investors and bankers in private meetings: they
will do what is necessary to stabilize the Economy. The change in
discourse from the era of Hernan Lorenzino is notable in the treatment
of investors and bankers. Now officials are not afraid to admit, as
they’ve been openly doing in meetings with businessmen, that inflation
is a problem and the fall in reserves is worrisome.
Moreover,
in those same meetings they say that they will lower the rate of
spending to some points below revenue. For that, the salary cap of 25%
will be real, more than anything in state salaries. The cutting of
subsidies will be, they say, gradual and punctual. Underlying measures won’t delay. If, obviously, in a year of economic slowdown.
The
fall in reserves clearly is at the top of the list that Kicillof has.
What Economy has let be known is that “the devaluation helped but they
can also withstand an exchange rate delay” by the inflationary effect. Until when? Kicillof,
Cabinet Chief Jorge Capitanich, and BCRA President Juan Carlos Fábrega
maintain the posture that the dollar will stay “around” 8 pesos will
stay until at least June.
The
economic team and the Central Bank’s technical staff (which now make
different decisions than from the era of Mercedes Marcó del Pont) know
they have to provide certainty for exporters to sell off in April/May
their produce from the huge harvest. They have to liquidated between
US$27 billion and US$30 billion over the whole year.
They
trust, in official corridors, that by keeping the dollar at these
levels, dollars will come in. Even more so with the measures that the
Central Bank has "rewarded them" a future dollar at low prices. The
grain producers sell their dollars, the dollar futures market covers
them and those pesos are placed in more competitive deposit rates.
The
other effect that helps this scheme is that the same fall off in
activity will hit imports. Less imports, less demand for dollars. It
ends the perverse but effective scheme producing a scarcity of foreign
currency.
What
will happen with interest rates? What officials let on is that the rise
in rates that the Central Bank, at levels similar to past inflation,
have come to an end (for now). Another upward movement rates will come,
they say, if inflation rises. They will closely follow this movement, if
it is what it is. If, as Economy believes, they can stop inflation
with salary increases at 25% and low public spending, interest rates
should be maintained at the current range of 30%.
Kicillof
and Lopez in their meetings admitted that among the external fronts,
the most advanced is the compensation to Repsol. They will be paid US$5
billion with bonds. With respect to the Paris Club, a liability adding
up to nearly US$10 billion, and about which there has been a lot of
rumors lately, Economy admitted that a potential deal "is going to take
a while now." They are at the stage of analyzing proposals and
polishing up what each can offer. But it is indeed confirmed that the
payment will be in bonds, and not in cash. Something crucial for the
reserves and the lack of dollars.
Finally,
the snapshot of the lawsuit with the holdouts shows what the Ministry
has been up to. Between now and the next few months they will continue
negotiating with banks to reach a plan to settle the issue once and for
all. The limitation on Economy is the famous Rights Upon Future Offers
(RUFO) clause which prohibits granting a better offer to the holdouts
without including the bondholders who accepted the swaps. This clause
expires in December 2014. From that moment on, the government can repay
the funds involved in the dispute and close the case. Probably the
negotiations are aimed at a preliminary approach this year and closing a
deal on payment methods only in 2015.
For
this reason, it will be decided in the coming months which offer makes
the most sense to Kicillof. It will be one that, in addition to settling
the issue of the holdouts, brings fresh money into the country. But
that, at this point, is futurism. What the government officials let on
now is there will be no news until June or July on the dollar. They are
committed to keeping the peace on the exchange rate and that the soybean
dollars come in. What comes later, no one knows. What isn’t a small
detail is that World Cup Month is coming. The betting is that Messi’s
goals and a good round for the national team in Brazil will slow the
conflicts in a difficult year. Everything remains to be seen.
Clarin
In the U.S., they advise against military assistance to Argentina
Friday, February 21, 2014
A
U.S. Congressman wrote a letter to the Secretary of Defense in which
with harsh criticism for Argentina, he asked that there not be a sale of
Hummer vehicles to our country, with which Cesar Milani aims to
modernize the equipment of the Army.
"I
am writing to you to express my concern and my opposition to providing
assistance to Argentina at this time," said Republican Congressman John
Mica, in a letter to which Clarín had access.
"The
Argentine Government has a recent and complex history of undermining
the interests of the United States in the hemisphere,” argues Mica. "In
addition, Argentina has proven to be unreliable in its relations with
the U.S. military," added the Congressman from Florida, recalling that
as an example of the "tense relationship,” Barack Obama has avoided a
stopover in Argentina whenever visiting Latin America.
"On
the international front, Argentina has not been a good faith player on
the world stage,” Mica went on, recalling that our country remains on
the "gray list" for the Financial Action Task Force (FATF) for its
shortcomings in the fight against money laundering and the financing of
terrorism.
"In
addition, it is important to note that Argentina is the only member of
the G-20 which has failed to comply with the reviews of the
International Monetary Fund. As a result, the United States continues
to veto loans from multilateral credit agencies to Argentina, nor does
it benefit from our generalized system of preferences (for imports),” he
adds.
"Congress
plays an important role in demanding responsibility from the Argentina
and calls on you to halt any support to that country, including the sale
of Hummer vehicles. Argentina’s misconduct undermines the interests of
our Nation in the region and threatens the security of the hemisphere,”
Mica concluded.
As
he told Clarin, Milani had agreed to the purchase of 35 Hummer vehicles
from the United States as part of his plan for retrofitting equipment
and improvement of salaries in the Army. Almost a campaign to align the
Army behind him and the Kirchner project, in a renewed politicization of
the armed forces that has been unseen for decades.
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