and on February 27 there will be an oral hearing where both parties will formulate their final arguments. From that date the Court of Appeals will take its time to issue its definitive sentence on the litigation that could endanger the normal payment of Argentine debt.

El Cronista

Vulture funds today will reject Argentine offer to reopen the debt swap

They will rule out the plan to reopen the swap and will insist on 100% payment of the principal owed.  The Argentine government will respond with a brief within one week

 

Friday, January 25, 2013

 

The vulture funds that have unpaid Argentine debt bonds and who are litigating in the United States will present their side today before the Court of Appeals in New York, to argue for the demand of a single payment of US$1.3 billion in case.  They will reject any possibility of reopening the swap, because that implies a haircut of 65% on their holdings.

 

The funds Elliott Management and Aurelius Capital obtained a first favorable sentence in their request on the part of Judge Thomas Griesa, which the Court of Appeals then left suspended until the underlying question is resolved, which is the possible violation by Argentina of the clause of “pari passu” (equal treatment for all creditors).  The filing today from the vulture funds corresponds to a schedule established by the appellate court, which began on December 28, 2012 when Argentina set its position and set forth the possibility of reopening the debt exchange to weaken Griesa’s ruling.

 

Next Friday, on the 1st of February, the national government will have its chance to answer the points put forth by the investors and on February 27 there will be an oral hearing where both parties will formulate their final arguments.  From that date the Court of Appeals will take its time to issue its definitive sentence on the litigation that could endanger the normal payment of Argentine debt.

 

Argentina will base its strategy on leaving open the possibility of allowing the investors that didn’t enter the swaps of 2005 and 2010 to exchange their warrants, under similar conditions.  In the final filing from Argentina it will again be proposed that the country could offer a new reopening of the exchange, for which it would be necessary to partially suspend the so-called Lock Law.

 

By imposition of this law, no operation after the swaps already help could contain more beneficial aspects than those obtained by those who did accept the trade.

 

 

Ambito Financiero

Final brief from the vulture funds today in New York

In a week it will be the Argentine government’s turn

 

Friday, January 25, 2013

 

The vulture funds, which didn’t accept entering the debt swaps and continue suing Argentina in New York, today are presenting their final brief before the Court of Appeals for the Second Circuit in that city.  The schedule continues with the response that the Argentine government will give on February 1 and finally the hearing on February 27 from which the court will give its definitive decision.  

 

The filing by the creditors today, led by Elliott Management and Aurelius Capital, is relevant because today with the one next Friday that Argentina will make, it could begin to delineate the upholding or overturning of the payment formula and application of the sentence upon the Bank of New York according to the ruling from the lower court judge, Thomas Griesa.  That sentence ordered the payment of 100% of the bonds plus interest (around US$1.5 billion) and in cash.

 

Interpretation

 

One of the points that could be modified from the previous rulings is the interpretation of “pari passu”, which until now is harming Argentina for not having proportionately paid the holders of swapped bonds and the holdouts.

 

But the Argentine position has been backed until now by different entities, among those that consider an adverse ruling to be a complicating factor for future restructurings in other countries and would not leave a good image for the United States as an international financial center.  Among the stand out supporters from Wall Street have been the American Bankers Association, the Clearing House Association, the Federal Reserve of New York, the U.S. Treasury, Anne Krueger (ex IMF), Puente Brothers and Deputy Prat Gay.

 

The government already indicated that it would be prepared to reopen the swap, but with equal conditions from when it negotiated the debt restructurings of 2005 and 2010.

 

 

El Cronista

The government wants to leave ICSID to avoid a new battle with the creditors

Cristina Fernández will travel this weekend to Chile to participate in the summit of Latin American countries with the EU.  They will seek to separate from ICSID.

 

Friday, January 25, 2013

 

By Carlos Arbia

 

At the summit of the Community of Latin American and Caribbean States (CELAC) and the European Union (EU), which is being held this weekend in Chile, the countries making up the South American block of UNASUR will seek to stop being subject to the decisions of the international arbitration tribunals, like the International Center for the Settlement of Investor Disputes (ICSID) which is a dependency of the World Bank, or other entities, as El Cronista reported on Monday.

 

The Argentine government will support a proposal from Ecuador at the regional level and which will be debated in this summit that will be attended by President Cristina Fernández de Kirchner, who will probably travel this afternoon or Saturday morning.   Also confirmed is the presence of Economy Minister Hernan Lorenzino.  The intention of the Argentine government to leave ICSID would also be to avoid another battle with the vulture funds.  It is feared that in case these funds don’t get a favorable ruling from the Court of Appeals in New York, they will go to the ICSID to file claims on their bond investments.

 

According to the view of economist Daniel Marx “it’s not so easy for the so-called vulture funds to go to the ICSID if the ruling against Argentina is negative from February 27.  But it has to be said that Argentina has 3 cases in the ICSID related to the bonds, most of them with Italian bondholders, they are 3 cases at different stages of resolution; if Argentina leaves the ICSID like Venezuela or Bolivia have announced, the countries can come and go but there is no retroactive effect.”  Marx also added that “what was put forth there follows its process, but the Italians could file because there is a treaty between Argentina and Italy, it’s not the same case with the U.S. but one cannot rule out an attempt by them to make another play to collect the US$1.33 billion that they want Argentina to pay.”  

 

On Monday, this newspaper reported that Kirchnerism will also seek this year through a law it will send to Congress to annul 59 bilateral investment treaties that establish the ICSID as the resolution forum for disputes between the Argentine state and multinationals.  This is no small thing, because Argentina currently faces 43 claims in this tribunal, in which the plaintiff companies (the last was filed by Repsol) are demanding indemnities totaling US$65 billion from the country.  And among these 43 cases there are five in which the ICSID already issued final rulings against Argentina, which the country didn’t honor.

 

Around whether Argentina can leave the ICSID to avoid some bondholders going there, economist Jorge Todesca said he doesn’t think it would be a good thing.  “It’s a very unpredictable tribunal around decisions, in any case in the majority of cases it pushes for negotiations in place of producing sanctions.  I am referring to cases in general, not only from Argentina, the same is done by World Trade Organization with the differences between countries.”