LEAD ARTICLES:
La Nacion: “Strong move by European investors in US court” by Martín Kanenguiser
El Cronista: “European bondholders also join the clash against the vulture funds” by Esteban Rafele
El Cronista: “Bankers and investors will have catharsis in New York over Argentine case” by Leandro Gabin
El Cronista: “Reopening of the swap has precedents” (no byline)
Ambito Financiero: “Exchange: Argentina’s attorney recommends to Uruguay” (no byline)
DEBT DIGEST:
CLARIN:
· “In Ghana, a judge will decide today if the Frigate will be moved or not,” by Natasha Niebieskikwiat
Sourcing the families of crew members still in Ghana with the Frigate Libertad, she reports that Judge Richard Adjei Frimpong will decide today whether to order the move of the ship to a different location.
AMBITO FINANCIERO:
· “European bondholders ask to join vultures’ complaint,” (no byline)
Short coverage of brief filed by three European funds in New York, sourced entirely from a Bloomberg story out of New York.
· “Country-risk recovery continues: it has already fallen 20%” (no byline)
Overview of how prices have rallied and country-risk has dropped off since the stay was granted by the 2ndCircuit.
PAGINA/12:
· “The vulture funds are very alone,” (no byline)
Report on the European bondholders (which it refers to also as “vulture funds”) seeking to join the case in New York, but focuses more on the parties that have filed more decidedly on Argentina’s side in order to support the argument of the headline.
OTHER NEWS ITEMS:
· The coming showdown over the Media Law is the main story in all papers today. Justice Minister Julio Alak warned the judiciary not to extend the injunction on the Media Law’s application, saying he would demand the recusal of every judge sitting on the Civil and Commercial court, which the Supreme Court gave jurisdiction on the injunction question. This set off an angry response from the opposition in Congress, which united in threatening Alak with action against him personally if that happened. La Nacion reports that Cristina ordered the “all or nothing” move against the judges, since she began to suspect the lower court was about to extend the injunction and would not stand for interference in her plans to dismantle Clarin. “It would end up with a confrontation with the whole judiciary and the Supreme Court. This insanity has to be put to an end,” is how La Nacion quoted Cristina according to an unnamed official who heard her say it. Ultra-K Dep. Carols Kunkel said the judiciary would be mounting a “coup” if it extended the injunction. Meanwhile, Fintech – which holds 40% of Cablevision – has approached the government to say it wants Clarin to sell Cablevision and comply with the law. Fintech is run by David Martinez, a Mexican businessman. Cristina heads to the Mercosur summit in Brasilia today, and La Nacion reports she is hoping for support from her neighbors in the implementation of the Media Law, but Hugo Chavez is in hospital in Cuba and there are doubts he will show up. Rafael Correa and Evo Morales will be there, but their Ecuador and Bolivia don’t belong to the block and they will be more focused on their countries’ admission rather than Argentina’s agenda (and Correa would only cause more trouble in Buenos Aires after his disastrous defense of Iran this week). Dilma Rousseff (Brazil) and Jose Mujica (Uruguay) don’t appear ready to wade into the issue at all.
· The IAPA mission is in Argentina, meeting with legislators and observing events as 7D approaches for the Media Law implementation, La Nacion reports.
· La Nacion reports that Argentina has denounced the US and the EU before the WTO over limits on lemons and beef (US) and biodiesel (EU).
JORGE ARGUELLO on Twitter and Blog:
· He has posted a link to the embassy’s latest newsletter:http://embassyofargentina.us/embassyofargentina.us/newsletter/newsletter15.pdf
· He also re-tweeted a tweet from “Larouchista.com” – an Argentine site devoted to Lyndon Larouche, which has posted a video of Arguello’s Instituto Gestar speech earlier this year, but with English subtitles:http://www.youtube.com/watch?v=RKWMfK1XcFk&feature=share&list=PL6rOQ2Lz9AhaZbuNc-ffVYM1HJv41KAHP
TRENDING TOPICS/ARGENTINA on Twitter:
· “Alak” has appeared in the bottom of the top 10 topics this morning for several hours, between #7 and #10.
La Nacion
“Strong move by European investors in U.S. court”
by Martín Kanenguiser
Thursday, December 6, 2012
Argentina’s European creditors yesterday demanded that the U.S. courts not stick their hands into the funds that should collect and complained that they widely exceeded their jurisdiction. In a strong brief, they also asked to be parties in the case in which a group of “vulture funds” and 13 Argentina small investors won a lower court case against the government over the possibility of collecting a debt in default for a total of US$1.45 billion.
As the American judiciary had indicated that it would attach the funds of Argentina’s creditors in Europe, among other regions, if the government doesn’t comply with the payment to the holdouts, these investors warned that they want to be heard in the case.
With holdings of more than US$1.2 billion (almost equal to the amount demanded by the holdouts in this case), they could play an important role if they are admitted by the Court of Appeals, in the same way that the American group led by Gramercy have been taken into account.
According to a report from the chief of analysts for emerging markets of the bank JP Morgan, Vladimir Werning, from the total of US$28 billion in restructured debt bonds potentially affected by pari passu, US$ 15 billion are denominated in euros. In the case of the coupons linked to GDP, from an emission of US$12 billion, there is US$5.3 billion in that denomination.
The brief, filed by attorney Christopher Clark, of Latham & Watkins LLP, indicates that “on November 21, Judge Thomas Griesa, after two fast reports and without notifying the European bondholders, issued two new orders, including a judicial mandate, practically identical to the one in February, which was well beyond the jurisdiction of the judiciary of the United States.” This is due to the attempt to “make use of an extraterritorial conduct and interrupt the rights and obligations of the European bondholders, whose bonds are governed by the laws of England and Whales, without nexus with those of the United States.”
The investors said that “the bonds in euros are paid in euros in Europe and the process of payments doesn’t travel through the United States. Together with other interested groups, they are holders of some US$1.2 billion. As such, they represent a large and distinctive group clearly affected by the order of November 21.”
In that direction, they demanded to have differential treatment for “those that will be treated as third parties” in the case, like the American bondholders and the different payment agents.
Werning indicated that the defense of the Europeans is different from that of the bondholders with warrants in dollars, “whose arguments are aligned with the government with the end of defeating the holdouts and distancing itself from a pro rata payment.” The European bondholders under British law, however, “are not attacking the arguments of the holdouts.”
El Cronista
“European bondholders also join the clash against the vulture funds”
They argued that the ruling from Griesa threatens payments in euros under European legislation. Their position is similar to the investment funds from the United States and the Bank of New York
Thursday, December 6, 2012
ESTEBAN RAFELE Buenos Aires
A group of investment funds located in Europe and with restructured bonds denominated in euros asked the Court of Appeals of New York to be accepted as a third party involved in the lawsuit that the vulture funds have brought against Argentina. According to the brief to the court, they understand that the decisions by Judge Thomas Griesa affects their interest and puts at risk their future collections.
The “Euro Bondholders” (made up of the investment funds Knighthead Capital, Redwood Capital and Perry Capital) said they hold €1.2 billion in restructured bonds. The amount represents more than 10% of the €10 billion in paper that Argentina swapped for bonds in default in the two restructurings.
The European funds emphasized Judge Griesa’s decision to block any payment of debt around the world, on December 15, if Argentina didn’t put together a guarantee fund of US$1.33 billion to satisfy the complaint of the fund NML Capital (Elliott), property of Paul Singer. The Court of Appeals postponed that order until February 27.
“Orders that prevent the so-called ‘agents and participants’ of the Republic to disburse the money owed to the Euro Bondholders at least that the Republic also pay the total demanded by the Plaintiffs, despite none of these parties being ‘agents and participants’ of the Republic or have a relevant connection to the United States,” they said in the brief.
Griesa had included in his order the clearing system Euroclearing, charged with distributing the money that Argentina will pay the bondholders in Europe, despite that they are bonds under European legislation and emitted in euros.
The request of the holders of European bonds to join as an interested party joined as well as Bank of New York on Monday, the trustee for the two exchanges. Investment funds based in the United States with restructured debt were already accepted as involved parties by the Court of Appeals, despite Griesa having denied the request earlier.
On Tuesday, the court confirmed that it will not rule on the underlying issue, at least, until February 27. That day, the parties are to convene in a hearing. In the coming three months each involved party will filed their briefs.
Argentina had hinted at the possibility of reopening the debt swap if the court asked for it, when appealing Griesa’s decision to pay 100% of the complaint of NML Capital. That position will be ratified on December 28 according to the law firm that is representing the country, the law firm of Cleary Gottlieb Steen & Hamilton. But the government is not thinking of taking a bill to Congress with those characteristics while the court is not considering it.
In parallel, the Economy Ministry that is led by Hernán Lorenzino is moving forward with the appeal “en banc”, the entirety of the Court of Appeals, to reject the ruling that started this storm. It’s that the court of the second circuit already ruled that the country should pay the vulture funds. The government promises to take that decision to the U.S. Supreme Court.
El Cronista
“Bankers and investors will have a catharsis in New York over the Argentine case”
It will be in January when the filings begin from the country and the holdouts before the U.S. Court of Appeals. Nobody is in the mood to predict the end of the case right now.
Thursday, December 6, 2012
LEANDRO GABIN Buenos Aires
The legal battle between Argentina and the vulture funds, still with an open ending until the end of February next year, generated a stir in the financial world and much confusion in the majority of operators. With 2012 already reaching its final round, the strategies projected into 2013 have a high dose of uncertainty. It’s for that reason that the Emerging Markets Traders Association (EMTA), an association that is made up of the biggest investment banks in the U.S. and institutional investors, will have a catharsis over the legal dispute that put Argentina on the verge of default.
The date will be on January 7 in New York, only days from the first filings before the U.S. Court of Appeals, in the holdouts’ lawsuit. It is worth recalling that this December 28 the country has to send its brief to the court and the January 4 the bondholders that entered both debt swaps (2005-2010) will join with theirs.
The EMTA meeting is entitled “Recent legal evolution of Argentine debt” and is organized by Bank of America-Merrill Lynch. “This event will cover the recent decisions of the courts in the United States regarding Argentina’s debt, and the decision in course of the clause of pari passu and its implications for the fixed-yield market,” says the slogan for the meeting, which is closed to the general public.
There will be two panels in the mega-event that will try to guide investors through the latest steps in the conflict with the vultures. In one of them, touching on the legal part, there will be representatives from law firms: James Kerr (Davis Polk & Wardwell), Anna Gelpern (American University), Timothy DeSieno (Bingham McCutchen) and Henry Weisburg (Shearman & Sterling).
On the financial side, those that will have to predict what will happen with Argentine bonds (such as buy or sell before eventual risk) are various Argentines that work on Wall Street: Alberto Ades (Bank of America-Merrill Lynch, formerly of Citibank), Sebastian Vargas (Barclays Capital) and Vladimir Werning (JPMorgan); together with Ben Heller of the ultra-speculative New York fund Hutchin Hill.
Will the brokers guess what will happen on 27F? It happens that after the ups and downs between Argentina and the vulture funds, February 27 at 2:00pm in New York (4pm in Argentina) will be the hearting where both parties will present and they will listen to the latest arguments and finally could give light to the decision the court will take (while it’s not clear if a ruling would come out that same day).
Meanwhile, some banks like BofA and Barclays, after recommending the sale of Argentine warrants, re-categorized local debt and now is labeled “marketweight”.
“It’s clear that the situation improved, a lot. But also it’s clear that the rally ended quickly for Argentine bonds. Now we’re on a plateau … waiting on how the lawsuit ends. Also the year is over, nobody wants to take more risks,” said one of the bankers that will participate in the event.
If something was clear in the war between the vultures and the government – beyond starting at the end of November when the ire of Judge Griesa was set off against the country – it’s that the outcome is far from being predictable.
El Cronista
“Reopening of the swap has precedents”
An eventual reopening of the debt swap by Argentina in the midst of the litigation in the United States with investment funds that rejected entering the operations of 2005 and 2010 “has precedents at the international level.” So said yesterday to DyN attorney Andrés de la Cruz, partner in the firm of Clearly Gottlieb Steen & Hamilton, the firm that is representing Argentina in the courts of New York over the case of the holdouts.
The attorney spoke before the Argentine Council for International Relations (CARI) about “The restructuring of Greek debt in the hands of the private sector: Point of departure. Process and result.” There, De la Cruz said that he was not referring to the Argentine case since it is in process in New York and, especially, because the firm that he works for is charged with putting together, with the Economy Ministry, a strategy against the bondholders’ complaint.
At the end of the conference – in which he reviewed the situation of Europe – the attorney mentioned that “the whole litigation department” is working on the Argentine case and acknowledged that “there are precedents at the international level” if the country were to put forth a reopening of the swap.
Ambito Financiero
“Exchange: Argentina’s attorney recommends Uruguay’s”
Thursday, December 6, 2012
Greece swapped its sovereign debt without falling into default and now come the cases of Spain and Italy, which instead of following the example of Greece’s restructuring, could look at the way that Uruguay did it, said an Argentine attorney that advised the Greeks and also the South American country.
Andrés de la Cruz is an attorney from the firm of Cleary Gottlieb Steen & Hamilton, which represents Argentina in the courts in New York over the case of the vulture fudns, and who spoke yesterday on the restructuring of Greek debt in the headquarters of the Argentine Council for International Relations (CARI).
The attorney explained the restructuring of Greek debt, emphasized the Uruguayan case in 2003 and said it was an example for using in the cases of current sovereign debts that are distressing Spain and Italy. De la Cruz didn’t want to talk about the case of the vulture funds that is affecting Argentina, because he isn’t a part of the team of attorneys addressing the issue.
“In Greece they swapped without defaulting. All of them understood that it was worth participating instead of generating chaos. The holdouts were paid. Adding lawsuits wasn’t desired,” he said. “However, he warned that the Greek restructuring “didn’t resolve the issue” but, he said, that operation was “separated in two intensive therapies” because even though the exchange was launched, the 10 million people of Greece still have to pay €360 million.
He said that in relation to the restructuring of bonds in the hands of the private sector (PSI), the real nominal haircut was 53% and the new bonds will be paid in 30 years. He argued that the participation of the bondholders was 80% and that it is governed by English law.
Then, in a dialogue with journalists, he said that in relation with the debt contracted by the private sector with European partners there is still €30 million to restructure, and there is €270 million left with the public sector to pay over “a very long term.” He said that Greece only represents 3% of Europe’s GDP, but the problem resides in the interconnection of its debt with the continent’s financial system. “Greece needs the support of its European partners. It’s a country that depends on tourism, it cannot unglue itself from Europe,” he said.
In another part of his chat, alluding to Europe, he said that “in the grand scheme of things there are poor people and rich people for which the federation functions to make transfers” from the more developed countries to those on the periphery. “There isn’t a country that can take charge of the de-capitalization of its banks,” he said.
He recalled that in the case of Uruguay’s sovereign debt, in 2003, in 45 days it was accepted by 93% of the creditors and the swap was closed with a default. He preferred the Uruguay option for the cases of Spain and Italy because “you have to give the public sector time to work on structural issues” of debt.
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