Debt Coverage:
La Nacion: “The holdouts demand US $1.45 billion”
El Cronista: “Vultures offer to halt offensive if a ‘bail bond’ is paid in New York”
El Cronista: “Vultures ask that Argentina not have more time to ‘scheme and conspire’”
Buenos Aires Herald: “Gov’t asks ‘good-spirited nations’ to defend Argentina against vulture funds”
New York Post: “Argentina’s new dance”
Bloomberg: “NML Urges Court Not to Delay Argentine Bond Payments”
Reuters: “Argentina’s holdout bondholders say: pay us now”
Business Insider: “It’s Getting Closer and closer to Game Over for Argentina”
La Nacion
The holdouts demand US $1.45 billion
Thursday, November 15, 2012
By Martín Kanenguiser
The bondholders that won the lawsuit in an upper court in New York over debt in default demanded the payment of US$1.45 billion and asked Judge Thomas Griesa to demand the money, immediately, to cut off the government from eluding compliance with the ruling.
In a brief filed before the judge, the attorneys for the vulture funds and small investors said that the government should deposit this money as a guarantee at the same time that it pays, in December, the bondholders that accepted the swaps to exit the default. NML, Aurelius, Blue Angel, Olifant and Pablo Varela justified this request in statements from President Cristina Kirchner and Economy Minister Hernan Lorenzino, who said that the government’s intention is to not pay them, despite the ruling from the New York Court of Appeals.
To reafirm their request, they said that Griesa should leave aside the stay of sentence of the upper court because if he doesn’t do that, the demand from the judge that the country pay the holdouts at the same time as the rest of the bondholders will not be honored, while case remains incomplete. “This case around the equal treatment clause has been in the works for two years,” they recalled. Immediately, they emphasized that Argentina’s attorneys, of the firm of Cleary, Gottlieb, Steen & Hamilton, have “tried to delay the implementation of these obligations beyond the critical month of December, when the country must pay US$3.3 billion in restructured bonds.”
The litigants’ attorneys referred to the two questions that Griesa must clarify on the upper court’s decision: the payment formula and the responsibility of the banks and payment agents in complying with the ruling. On the first matter, they said that in reality it’s already clear that the country must pay them 100% of what they demand; and while the court had mentioned the amount of US$1.333 billion, they asked for US$1.45 billion yesterday due to the weight of interest. And if the government, they said, wants to wait until the end of the lawsuit to see if they win, they could deposit that sum as a guarantee.
Regarding the intermediaries, they reiterated that both the Bank of New York and its European counterparts should be named as possible accomplices if they help the government evade the sentence. Tomorrow it will be seen if the government is presenting its payment plan and if it commits to obey the judge.
El Cronista
Vultures offer to halt offensive if a ‘bail bond’ is paid in New York
Thursday, November 15, 2012
By Leandro Gabin
In the presentation made two days ago the vulture funds in New York unveiled a new factor. NML Capital and Aurelius Capital made an “offer” to the government in order to give up on attachments that endanger the payments in December for more than US$3 billion: that the Executive Branch made a kind of judicial deposit or “bail bond” in the U.S., in the name of the courtroom that is handling the case, for the equivalent of US$1.45 billion. That money would be in “custody” until the legal process runs all of its appeals and the ruling is final (after having passed, eventually, by the U.S. Supreme Court). So it was unveiled in one of the arguments made by the funds in their presentation. In any case, Argentina has the option of paying a bail of US$1.45 billion while awaiting appeal.
“This will fully protect Argentina in the unlikely contingency of it prevailing before a panel of the Second Circuit and in the Supreme Court, while meting out the security that Argentina will make all of its payments in December,” says the brief filed on Tuesday in New York.
The amount that the holdouts are asking for is not a whim, as it would cover the approximately US$1.43 billion that Argentina currently owes the plaintiffs and would allow to build a small margin for interest that could accumulate during the appeal.
According to Eugenio Bruno, attorney for the Garrido Firm, “that money would be subject to the final ruling. Argentina would deposit that money, which could be in cash or bonds, like a judicial bail. The creditors seek that money when all the litigation ends, and if they win as they hope, they will have direct access to that and won’t have to go back to seeking ways to collect,” he explained.
The strategy of the vulture funds was to counteract the arguments of the government that this entire legal process is affecting debt payments to the creditors that entered the swap of 2005-2010, and the intermediary banks.
“Argentina will not become irredeemably harmed by the rejection of its request to stay the sentence, above all because it could deposit a bail bond to protect its rights in appeal,” say the funds. They are covered even in statements from President Cristina Kirchner that they will pay public debt rigorously. “In the proceedings it’s clear that Argentina has sufficient funds, including more than US$40 billion in cash reserves, to pay the plaintiffs the judgments they are owed. And President Kirchner has confirmed recently that the Republic has sufficient dollars to pay all its obligations. But that it simply refuses to pay the plaintiffs because it becomes politically convenient to discredit us as ‘vultures’”,” says the brief by the funds.
From this point forward the options for the government, represented through the firm of Cleary Gottlieb Steen & Hamilton LLP, are not many taking into account that the strategy is to not pay a single dollar to the holdouts. The attorneys that represent the country will have to see how they show “willingness to pay” if they continue rejecting any “offer” made by the creditors. “The path that Argentina is on by rejecting this offer is to invoke monetary questions, price stability, the price of the dollar, which would be to justify not being able to place this money on deposit when it has international reserves that greatly exceed that. But it will not be taken into account by the judges and it will become clear that they simply don’t want to pay,” explained one of the attorneys for the holdouts.
El Cronista
Vultures ask that Argentina not have more time to “scheme and conspire”
Thursday, November 15, 2012
By Laura Garcia
Even with the formalities and technical obscurities that the occasion calls for, the new brief that was filed yesterday by the vulture funds in their legal battle against Argentina had all the elements of a spiteful letter and well reflected the irritation “with almost mocking moments” that had dominated the hearing on Friday before Judge Thomas Griesa.
The plaintiffs, led by NML Capital, make a central argument: Argentina doesn’t deserve more time. For that they ask the court not, on December 1, renew the stay on the application of the adverse ruling for the country. “To give Argentina another three months to scheme and conspire will only increase its chances to manage to evade this ruling,” the attorneys said, accusing the government of intensely studying a plan to evade compliance with what the court orders.
“If the stay is continued it would provoke irreparable harm to the plaintiffs because it will allow Argentina to use its agents based in the United States to make substantial payments on restructured bonds in December 2012, without paying anything to the plaintiffs, while outside of the law it seeks to implement a a new structure of payments that doesn’t use these agents for future payments,” says the document.
The latest statements by Cristina Kirchner, defying the ruling and flaunting the dollars that are only destined for the bondholders from the swap, had already clearly exasperated Judge Griesa in the hearing. And the legal representatives of the funds showed themselves ready to build on that annoyance and exploit it in their favor.
“After completing these payments, Argentina has until March 31, 2013 to come up with a plan that allows it to evade notwithstanding February 23, trying to relocate the payment, mechanisms outside the supervisory jurisdiction of this court. Attempts of this kind are strictly prohibited under the very clear terms of the order of March 5, but Argentina –according to its own local press – has already hatched a series of alternative schemes. [...],” explain the attorneys.
“Mandating that Argentina finally honor its promise to the plaintiffs, after breaking that promise for years, is not a cognizable injury to Argentina, let alone an irreparable harm. [...]There is no merit to the argument urged by Argentina’s counsel at the November 9 hearing that failure to continue the stay in the weeks or even days before the December 2 scheduled payment on the restructured bond would cause great disruption in the market. Any disruption to the market would be entirely Argentina’s own doing, and the consequence solely of its own rebellious threats. Argentina can calm any market turmoil by simply retracting these ill-advised public statements and declaring that it will honor all of its payment obligations in December 2012, including to the plaintiffs, something it can clearly afford to do,” they insist.
Fight among vultures
But there are not only attacks on Argentina. The bondholders that did enter the swap, many of them vultures in full right that then entered in 2010, also had their part. “They have nothing to say here,” spat the attorneys. “These parties’ actual purpose for interjecting themselves into the proceedings at this late date would appear to be simply to delay enforcement of this Court’s orders and the Second Circuit’s ruling and thereby ensure that they will continue to be paid by Argentina. That, of course, is not a legitimate basis for intervention,” they wrote.
“The plaintiffs understand the desire of the beneficial holders of the restructured bonds to be paid pursuant to the terms of their contract with Argentina, as they have been paid for years. The plaintiffs have a similar desire and legal right to be paid, a right that Argentina has breached over and over again,” they said.
While many analysts today still believe that on December 1, Griesa will renew the so-called “stay” that leaves the obligation to begin paying the vultures suspended, all indications are that today their strategy is pointed toward making Argentina suffer until the last minute, giving them only tiny doses of air as the legal process moves ahead. But nobody dares to dismiss that the payments in December will arrive and a “technical default” would again be inevitable.
For the end of the document, the vulture attorneys reserved a certain amount of malicious humor. “The court has already said to the exchange bondholders: if you want to collect, talk to Argentina. They can pay you. And of course, Argentina has not threatened to default on the restructured bonds. On the contrary, the President recently declared that “Argentina is going to pay, in dollars, because we have them.” If the bondholders from the exchange believe that the frequently repeated commitment to pay them on time and in full is less secure than her commitment to not pay the plaintiffs, then they should ‘talk to Argentina.’”
Buenos Aires Herald
Thursday, November 15, 2012
Foreign Minister Héctor Timerman further underlined the country’s respite against paying the vulture funds to a US hedge fund, in an article written for a US newspaper about how Latin American and Africa are affected by vulture funds.
In a personal account, Timerman stated that Argentina is not willing to pay the vulture funds and also requested the help of “good spirited nations” in order to continue to argue the issue and clamp down on the existence of vulture funds.
“Our message is clear: we will pay the overwhelming majority of debt holders, who have agreed to a debt swap that has contributed to Argentina's recovery that also pays a fair share of interest on those investments.
New York Post
Wednesday, November 14, 2012
By Michelle Celarier
Argentina is developing a plan to sidestep a federal court ruling and not pay Paul Singer’s Elliott Management as much as $1.3 billion, lawyers for the billionaire hedge-fund mogul said in a court filing.
Leaders of the South American country have fought paying Elliott alongside the holders of its restructured bonds that it is expected to pay $3.3 billion next month.
A Manhattan federal court ruled that if one is paid, both have to be paid — and any move by Argentina to do otherwise would be in defiance of Judge Thomas Griesa.
Bloomberg
Wednesday, November 14, 2012
By Bob Van Voris
Elliott Management Corp.’s NML Capital Fund and other holders of defaulted Argentine bonds urged a court not to allow the country to go forward with $3 billion in scheduled payments on restructured debt next month without paying them as well.
Lawyers for the bondholders yesterday asked U.S. District Judge Thomas Griesa in Manhattan to enforce rulings he made and delayed that would require Argentina to pay on its defaulted debt whenever it makes payments on the restructured debt.
In a Nov. 9 conference, Griesa said he will keep the orders on hold until he rules on two remaining issues in the case, which he said he will do by Dec. 1. Argentina is seeking a longer stay so it can go forward with the December payments while it tries to appeal.
Reuters
Wednesday, November 14, 2012
By Jonathan Stempel
NEW YORK, Nov 14 (Reuters) - Holdout creditors that own defaulted Argentine bonds urged a U.S. federal judge to order that the country pay them, just hours after Argentina appealed a court decision that found it had discriminated against those bondholders.
The developments escalate a long-running battle between Argentina and holdout bondholders that refused to join massive debt swaps in 2005 and 2010, an outgrowth of the country's roughly $100 billion default nearly 11 years ago.
Business Insider
Wednesday, November 14, 2012
By Linette Lopez
Pirated boat aside, it's become increasingly clear in the last 24 hours that if Argentina loses some small legal battles, the country risks default.
Bloomberg's Katia Porzecanski reports that it could happen as soon as next month if things don't go the Argentina's way.
The problem is that the country is embroiled in a long legal battle with investors (including hedge fund manager Paul Singer) who bought Argentine sovereign debt in 2001, the last time the country's economy collapsed. Since then, investors have been given two chances (in 2005 and 2010) to restructure that debt and take a haircut.
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