The newspaper The New York Post reported in an article that the country’s payment agents, including Bank of New York and Euroclear, will not be able to ignore this legal blow.

Debt Coverage:

 

La Nacion:  “Strong controversy between the vulture fund NML and the government” 

 

Ambito Financiero: “Vulture funds: Griesa called key hearing in New York”

 

 

La Nacion

Strong controversy between the vulture fund NML and the government

 

Friday, November 9, 2012

 

By Martín Kanenguiser

 

The head of the vulture fund NML Elliot, Paul Singer, poked his head into the public arena to criticize, without subtlety, Argentina and received an immediate response from the government, accompanied by an important endorsement from Ibero-American general secretary, Enrique Iglesias.

 

In a letter sent to his investors, published yesterday by the newspaper El Cronista, Singer said with irony: “Different from what some in the press want you to believe, we didn’t buy Argentine debt to end up with a boat too big to sail on Long Island,” in reference to the Frigate Libertad, attached in Ghana.

 

Singer, who sent this private letter to his clients, which was revealed, said: “The truth is that we began to buy Argentine bonds that were not in default many years ago, because we thought they were cheap in relation to the vast economic potential of Argentina.”  The vulture funds NML, Dart and Elliot have been accused of buying most of the bonds in default at a low price, to then demand 100% of its nominal value in court.

 

But Singer emphasized in the last decade “the prices were then hit hard by prolonged economic mismanagement, the repudiation of the debt, the punishment of bondholders and the litigation with thousands of creditors,” on which he blamed the value of bonds.

 

To support his position, he recalled that, at the end of the Second World War, Argentina was the sixth largest economy in the world.

 

In turn, now he criticizes it for “expropriating assets of companies and citizens to fill official coffers, imposing severe protectionist measures, impeding its citizens from accessing small quantities of dollars to travel abroad.”

 

"Ironically” –added the businessman linked to the Republican Party – “its economy and its citizens would benefit immensely if Argentina would respect the law and pay its debt still in default,” equal to US$11 billion.

 

In an open letter, the ambassador to the United States, Jorge Argüello, responded strongly: "The whole world is every day more interested in how this confrontation unfolds between a country and government fond of the law, which honors its debts and pays them duly, and a group of speculators that insist on flapping their wings like vultures.”  The diplomat said that “things are changing, as they no longer hover over a moribund Argentine economy, and the rest of the world is going to take note that, to recover from crisis, it needs true investors and entrepreneurs, not vultures.”

 

Argüello emphasized that the governments of Nestor and Cristina Kirchner “inherited a default that is being solved starting with paying – religiously – every one of the maturities agreed to in the successful restructurings of 2005 and 2010,” which came to an acceptance of 93%.

 

Also, Ibero-American secretary general Enrique Iglesias criticized the speculative funds, in statements to reporters in Madrid.  “It is really indignant and unacceptable that the international financial system has not yet put a limit on the behavior of these so-called vulture funds, who, abusing the legal or institutional holes, continue attacking countries and their finances.”

 

Today a hearing is scheduled in New York for Judge Thomas Griesa to hear the attorneys for teh creditors and the government to determine the payment formula after the sentence against the country in the Court of Appeals of New York.

 

The newspaper The New York Post reported in an article that the country’s payment agents, including Bank of New York and Euroclear, will not be able to ignore this legal blow.

 

 

Ambito Financiero

Vulture funds: Griesa called key hearing in New York

 

Friday, November 9, 2012

 

Thomas Griesa called a hearing today in the courts of New York on the case of the vulture funds against Argentina.  The judge agreed with the parties on a hearing today at 11:15am (New York time, 1:15pm in Argentina) in the courtroom located at 500 Pearl Street, in front of the Brooklyn Bridge, to decide on the steps to follow after the decision by a Court of Appeals for the second circuit issued on October 26.

 

That decision, which on one side recognized Argentina’s lack of “equal treatment” for creditors that are litigating compared to those that entered the debt swap of 2005 and 2010, and on the other criticized part of Griesa’s verdict on the form of  payment to the vulture funds.

 

The Court of Appeals – after dismissing the payment formula put down by Griesa – asked the judge to clarify how the decision would be carried out and how to apply it to third parties involved.

 

Technically today will begin the process of deciding how the prorrata will be done on payments to the vulture funds, and on the other side, if the ruling applies to intermediaries, the payment agents like Bank of New York.

 

For Argentina, with Griesa’s ruling as it is, it has practical impossibility, since it affects the 93% of the investors that did enter the swap of 2005 and 2010, which the US court encouraged, as a solution between debtor and creditor, during these years.

 

Two days ago, Elliott, the fund which is owned by magnate and top-ten Republican contributor Paul Singer, and which has among its funds NML, one of the vultures of Argentina, asked to speed up the decision period, due to recent official statements about the government’s refusal to pay the vulture funds.  Yesterday, Griesa called the two parties, and convened a hearing that will take place today and that also has cited the holders of bonds coming out of the two debt swaps.

 

The ruling that led to this new hearing was issued by the court of appeals on October 26.

 

Through Finance Secretary Adrian Cosentino, the government downplayed the importance of the sentence do to its practical impossibility.  “The sentence has been suspended from the same moment it was issued (March 2012) and today remains suspended which alters nothing of the current status quo,” said Cosentino at the time, after the upper court ruling was revealed.

 

Cosentino remarked that the sentence “doesn’t bring the litigation to an absolute end over “pari passu” (equal treatment) which will require additional procedures in the lower and higher courts, and of course before the U.S. Supreme Court.”