On December 1, Griesa’s ruling will be known (with the payment formula and the financial institutions affected). There petitions will be evaluated on appeals while the Court of Appeals will continue working

Have a great weekend!  

Debt Coverage:

 

El Cronista: “The government today plays key card before US court: rejects paying the vultures”

 

La Nacion: “Argentina, all or nothing before Griesa”

 

Ambito Financiero: “Key: Argentina response to the vultures before Griesa”

 

·         Argentine bonds in New York continue to be hammered.  El Cronista calculates they’ve lost 35% in value since the Oct 26 ruling. 

·         La Nacion reports that the Corvette Espora remains in Cape Town in limbo because the German firm contracted to service it – MTU – won’t send personnel to handle its repairs due to a US$450,000 unpaid debt Argentina has with the company.

·         La Nacion noted Hector Timerman’s HuffPost op-ed was published in Pagina/12 earlier this week.

El Cronista

The government today plays key card before US court: rejects paying the vultures

 

Friday, November 16, 2012

 

By Juan Cerruti

 

The government will play a key card today in the negotiation with the vulture funds over the debt in default.  It will be when, at the last hour of the day, it presents its brief before the judge in New York, Thomas Griesa, with its position on the impasse with the creditors that didn’t accept the restructurings of the debt held in 2005 and 2010.

 

According to what El Cronista could confirm, the document that the country will present will ratify its rejection to pay the vulture funds, at the same time emphasizing the risk that  is posed for third parties – both the bondholders that entered the swap and the banks that must make the debt payments – by the ruling of the Court of Appeals of New York that backed the theory of “pari passu” which demands granting the holdouts the same treatment as the rest of the creditors.

 

Argentina’s disclaimer will be based on refuting the payment proposals that were presented on Tuesday by attorneys for the vulture fund NML-Elliott (the same that attached the Frigate Libertad) and which is demanding collection of US$1.43 billion.  Thus, it will be complemented with two separate documents that also will be sent today to Greisa’s courtroom from a group of institutional investors that did enter the swap, the Bank of New York (fiduciary agent, which is to say the one that sends Argentina’s debt payments) and other representatives from the fiduciary industry.

 

In the case of the bondholders that entered the swap, they will warn that the moves of the vulture funds put at risk the collection of their debts.  Meanwhile, the Bank of New York and the rest of the financial entities will also expound in writing on the legal risks that are posed by the application of the “pari passu” criteria.

 

Presentation

 

On Wednesday, Argentina filed a brief before the Court of Appeals, directed to the plenary of that body, with the goal of having it review its decision.  It argued that a ruling in favor of the vulture funds hits against the stability of the international financial system.

 

After the brief that will be delivered today by Argentina’s attorneys – the firm of Cleary, Gottlieb, Steen & Hamilton-  before Griesa, the lawyers of the vulture funds will have the chance to make a reply on Monday in the same courtroom.

 

Starting there, Griesa will have to put together a proposal for payment by Argentina to the creditors, which according to the judge himself will be taken up to the Court of appeals for its consideration before December 2.

 

For the Argentine government the judicial timing is crucial.  In particular because if Griesa sticks to the deadlines, the ruling from the Court of Appeals could become final before December 15, when the country has to make a payment of US$3.3 billion on the GDP coupon bond.

 

Yesterday, the Argentine foreign minister, Hector Timerman, appealed to the solidarity of the international community in favor of Argentina.  In a U.S. newspaper, he asked for “all nations and organizations of good will” to help Argentina “to get rid of them” (the vulture funds).

 

Another possibility that the Argentina government is mulling is that the appellate court would end up confirming the theory of “pari passu” but find it inapplicable due to the potential harm it could generate for third parties, by which it leaves the measure stayed, which has been the case until now.

 

 

La Nacion

Argentina, all or nothing before Griesa

 

Friday, November 16, 2012

By Martín Kanenguiser

 

The lights at the headquarters of the Economy Ministry were on until very late last night due to the arduous work dedicated to the presentation that the government has to make today before the judge of southern New York, Thomas Griesa, to reverse the adverse ruling in which he ordered the country to pay the bondholder that remain in default.

 

With a delicate balance between the need to reaffirm its previous posture, but without increasing the explosive impatience of the judge, Economy worked on a brief, in permanent contact with the attorneys representing the country, of the firm of Cleary, Gottlieb, Steen & Hamilton of New York.

 

The government must present a response to the request from two days ago of the holdouts to collect US$1.45 billion and, at the same time, a sworn declaration that it will comply with the orders of the judge.  But as both should be coherent between them, the legal language must be very careful to defend the national position but, at the same time, not repeat concepts that, as Griesa previously has shown, show that the government does not want to honor the sentence to pay the holdouts.

 

The key points of the official brief will be:

 

* That the Court of Appeals ruling at the end of October effected an abusive interpretation of the clause of “pari passu” by granting the holdouts the same status as the 93% of the bondholders that entered the swaps of 2005 and 2010.  Thus, it would elegantly elude the request by the judges and the plaintiffs to state how it would pay the US$1.333 billion determined by the Court of Appeals.

 

In an implicit manner, Argentina will also reject the possibility of reopening the swap – as proposed by some attorneys and financial analysts as a show of “good faith” – to pay the holdouts with a haircut.  It will of course include the rejection of the option to pay them 100%, as asked for by the plaintiffs NML, Aurelius, Blue Angel and the 13 Argentine small savers (who demand US$200,000).

 

* That the judge must not affect the rights of third parties, like the bondholders that entered the swaps with large haircuts, nor the payment agents, like Bank of New York (BoNY), charged with transporting Argentina’s money to the United States.  In this direction, it seeks to elude the possibility that American courts would block the coming payments that the country must make, reflected in the sharp drop in bond prices among those with New York legislation in recent weeks.

 

Argentina’s presentation will count on the very valuable contribution of the bondholders who entered the swap themselves and from BoNY, which will present their respective briefs, said sources linked to the case to LA NACION.

 

Last night, the Gramercy fund confirmed to the Bloomberg news agency that together with other investment funds that participated in the swap, they contracted the famous lawyer David Boies, former representative of Al Gore and the American government in glittering cases, as LA NACION reported on Wednesday.

 

On the other hand, Gramercy denied that it is studying with the government the possibility of accepting another place to collect other than New York, in case the stay is lifted on the case against the country.  “Gramercy categorically denies having had discussion with Argentina around alternative methods of payment,” said an email written to the news agency.  Of course, to publicly accept such a thing would expose them to the possibility that Griesa would accuse them of eluding the sentence.

 

On Monday, the holdouts will reply to Argentina’s filing and then Griesa will decide a few days later the form of payment and responsibilities of third parties.  The recourse will fall to the government to seek a complex appeal before the American Supreme Court.

 

 

Ambito Financiero

Key: Argentina response to the vultures before Griesa

 

Friday, November 16, 2012

 

The Argentine government, through its legal representatives in New York, will today present before Judge Thomas Griesa the response to the filing by the vulture funds last Tuesday.  This brief will count not only the support of the so-called “G-93”, who are the investors that represent the 93% of the debt that entered the swap, but also there is speculation on the “amicus curiae” effect from the U.S. Treasury.  This refers to the probably filing of a voluntary brief from the Treasury, which despite being distant from the case, will offer its opinion to collaborate with the court on resolving the conflict set off by the Court of Appeals of the Second Circuit and Griesa’s decision that the bondholders be paid.  The Treasury filing could come together in the form of a testimony not solicited by Argentina; or a brief od its legal opinion; or a report of law on the conflict.  Of course, the court always has the final decision on the admissibility of an “amicus curiae”.

 

After the ruling from the Court of Appeals of the Second Circuit and the legal counterpoints between the funds and the Argentine state, Judge Griesa asked for additional informative filings.  So, on Tuesday, the vulture funds filed their briefs and today Argentina’s response is expected, plus the possible “amicus” brief and a sworn declaration from Cristina’s government in relation to its compliance with the orders of the US courts.  Then on Monday, the plaintiffs will have to present their response.

 

On December 1, Griesa’s ruling will be known (with the payment formula and the financial institutions affected).  There petitions will be evaluated on appeals while the Court of Appeals will continue working.

 

Regarding the briefs, experts said that in addition to Argentina’s filing today, it will count on a brief from the Bank of New York Mellon, where it will explain its situation in detail, and on the brief from some bondholders that accepted the debt restructuring and will not sit passively in the crossfire between Argentina and the vulture funds.  While in relation to the filing of an “amicus curiae”, which experts view with great importance, they recall that on the “pari passu” clause, in 2003 the Federal Reserve found the interpretation by the bondholders to be “terrorism of the payment system”.  Of course this contrasts with a brief from the US State Department which had a more technical and less apocalyptic interpretation.

 

Yesterday, Foreign Minister Hector Timerman reiterated that Argentina will pay the creditors that accepted the restructuring of sovereign debt, but not the “vulture funds” that rejected an agreement and pushed nations to unite to create “a world free of these scavengers”: “We are going to pay the immense majority of the bondholders, who have agreed to a debt swap that has contributed to Argentina’s recovery,” said Timerman in an opinion column that was reproduced on the website of the Presidency.