Vulture funds: Griesa insists that Nacion report on its movements It’s by request of the holdouts that are seeking to attach the country’s funds abroad. The bank rejects the measure.

Lead Articles:

 

El Cronista: “On the eve of the vulture hearing, funds start pulling out of Argentina”

 

Clarin: “Vulture funds: Griesa insists that Nacion report on its movements”

 

OTHER NEWS ITEMS:

• Citing BCRA statistics released on Friday, AF and El Cronista report that the Central Bank’s reserves have fallen nearly US$1 billion since the start of 2013.  This is due mostly, the Bank contends, to the poor grain harvest of 2012 and will be reversed when the bumper soy crop begins to be exported at the end of March.  However, both papers contend the problem is broader than that, owing to the lack of new dollar deposits in Argentina, the seasonal wave of Argentine summer tourism abroad that carries dollars out, and the lack of dollar offers for the Central Bank to buy up on the local markets.
• In today’s edition of the “Charlas de Quincho” column in AF, there was the following paragraph about the recent follow-up delegation visit to the UAE, led by Axel Kicillof, on behalf of YPF:

“During her long trip on Thursday to Santa Cruz, Cristina saw, in addition to the daily newspapers that irritated her with their statements from the Jewish community in Argentina concerning the Iran agreement over the AMIA business (she explained as much in her Twitter account), the reports that Galuccio, Julio de Vido and Axel Kicillof sent to her on their return from the UAE where they had spent the week fine tuning the agreements negotiated by Cristina on her trip last month. As with all these reports, everything is upbeat, in particular the perception that the YPF people say they discerned among the companies with whom they met concerning the new YPF model which although it belongs to the state, is managed along corporate lines, they point out. This is new for Argentina, but this is being watched closely by companies interested in entering into business deals with the company inasmuch as this is a condition for getting it to part with some cash So far, Galuccio has managed to have his corporate criteria endorsed by the officials watching over his management from the Executive Power—De Vido and Kicillof—and hitherto he has come up trumps, particularly in securing an agreement with the Bulgheroni group at the end of a series of negotiations which included YPF helping out PAE in its crisis following the antics of the Cerro Dragon union leaders. In these meetings in the UAE, the officials heard offers from an association of companies which see anything unconventional as a great business opportunity. This includes the IPIC fund, which owns the Spanish CEPSA, with major dealings in Algeria which offered agreements for work on Argentine soil and also for projects in other countries for unconventional exploitation. This company had approached YPF before the Repsol stake was expropriated, and now pressing its case to the new administration, ignoring the threats of a lawsuit made by Repsol to anybody who approaches YPF. It is interested in the urea business for fertilizer production. This offer is echoed by Mabadala, which belongs to the Government of Abu Dhabi, as well as that country’s TAGA and ADIA, (Abu Dhabi Investment Authority), a company engaged in investing this country’s money in all kinds of enterprises. During the business meetings, Galuccio emphasized the positive performance of YPF shares  on the Stock Exchange which are already above the value they had on the day Repsol’s stake was expropriated. There is no other country-business as successful as this one which the government can display, which explains why on Wednesday Cristina will break her mini-vacation to travel to El Trebol, where it is unclear whether she will continue to Buenos Aires or return to Santa Cruz before returning to town on Monday February 18.”

• The chief legal adviser to the DAIA – a Jewish community organization that originally appeared to soft pedal its opposition to the Iran deal – is now saying that the proposed “Truth Commission” could be “used” by the Iranian regime “to hide the responsibility of the authors of these crimes.”  By all accounts the local community’s opposition is hardening and getting more vocal, as the government digs in.

 

 

TRENDING TOPICS/ARGENTINA on Twitter:

·         No political topics trending today, apart from those referring to the Pope’s ‘resignation’ this morning.

 

El Cronista

On the eve of the vulture hearing, funds start pulling out of Argentina

Volume drops sharply.  After the peak of volatility at the end of 2012, the big investors are undoing their positions before the court ruling

 

Monday, February 11, 2013

 

The negotiation of Argentine government bonds is reducing on the eve of a court ruling that could bring the country to default for the second time since 2001.

 

The quantity of negotiated bonds, over the base of their nominal value, fell by approximately half of the average amount since October 26, when an appeals court in the United States upheld the ruling that Argentina cannot pay the holders of restructured bonds without paying the so-called holdout creditors from the default of 2001.

 

Argentine bonds in dollars coming due in 2033 were negotiated within a band of prices of 1.8 cents in that period, under the band of 3.4 cents for U.S. Treasury bonds with similar due date and a band of 6.6 for Brazilian bonds.

 

The negotiation of Argentine bonds is placed in its lowest volume since the worst moments of the credit crisis of 2009 at a time when President Cristina Fernández de Kirchner is appealing a ruling that orders her to pay US$1.33 billion to bondholders that didn’t enter the exchange.

 

After the volatility doubled up in the last three months of 2012 over the previous year, operators are pulling out before the court comes back into session on February 27 to rule whether Argentina will have to pay the holdouts the totality of the debt, a ruling that could oblige Fernandez to suspend all debt payments in dollars.

 

Last year, Argentine warrants were the most volatile of the big emerging markets.  But the administrators of portfolios invested US$12.7 million in the week ending January 30, approximately half of the week previous to the October ruling, according to the U.S. research firm EPFR Global.  In that same period, weekly inflows to the debt funds of emerging markets had a jump of 25%, to US$1.6 billion, according to EPFR data.

 

The daily average volume of dollar bonds negotiated in the local Argentine market in the last 14 days went down from US$58 million in the previous two weeks to US$36 million, according to data put together by the automated system of negotiation, the Open Electronic Market of Argentina (MAE).  The total amount of bonds in dollars negotiated in the first five sessions of February, which was placed at US$171 million, is the worst monthly start in at least a year and compares to US$216 million in the same period of 2012.

 

Loic Cadiou, senior director of the fund H20 Asset Management which took part in the sovereign debt swap of 2005 but later sold its holdings, has avoided paper subject to international law due to its prices.

 

But he argued that the legal uncertainty has generated transactions in sovereign bonds under local law and warrants issued by Argentine provinces, without legal risk.

 

However, some prefer to avoid bonds altogether for now.  Julian Adams, executive president of Adelante Asset Management, is one of the many fund administrators that sold Argentine positions in January under international law due to their legal risk.

 

According to the executive, the majority of the analysis that recommends maintaining Argentine debt is based on there being a legal order that impedes the compensatory chambers from making the payments ordered by the court.  “It’s a very difficult decision,” he said.

 

 

Clarin

Vulture funds: Griesa insists that Nacion report on its movements

It’s by request of the holdouts that are seeking to attach the country’s funds abroad.  The bank rejects the measure.

 

Monday, February 11, 2013

 

Judge Thomas Griesa ruled on Friday that Banco Nacion must reveal any movements abroad of Argentine state assets or those of officials from our country that are acting on its behalf.  According to the text in the electronic record of the case entitled NML v. Argentine Republic, Banco Nacion currently operates in 15 countries.

 

This case is different than the one currently found in the Court of Appeals in New York, in which the vulture funds and Argentina are debating the reach of equal treatment among creditors, which is to say the so-called “pari passu” clause.  While the goal of NML in both cases is the same – to collect what it says it is owed – there are procedural differences.  One should recall that NML is the one that managed, after a court ruling in its favor, to attach the Frigate Libertad in the port of Ghana.

 

On the case involving Banco Nacion, on June 14, 2010, NML – Paul Singer’s fund – send a court order to the Argentine entity to report on the flow of assets from Argentina abroad.  It was another maneuver in its attempt to collect on rulings in which Judge Griesa found that Argentina had to pay 100% of the bonds it holds in default.

 

This court order was upheld on September 2 and December 14 of 2011 by Griesa’s court.  But according to the New York judge, Banco Nacion not only didn’t comply with it but formally filed its first objections on January 6, 2012.

 

According to Banco Nación, laws of the countries where it has branches do not allow the revealing of the kind of information that NML is seeking.  Griesa, however, says in Friday’s decision that the Argentine entity never proved that.  On the contrary, Greisa says that “in almost all cases the laws of foreign countries allow the revealing of this information … if there is a court order.”  

 

According to Griesa’s ruling, the issue in discussion is if a court order is needed from the country in question or an order from the court in New York.

 

Griesa concludes that in all cases an order from his court is valid.  Moreover, on page 24 of his decision, the judge states that Banco Nacion acted in bad faith.

 

The court order that NML presented initially to Banco Nacion, and which was upheld by Griesa again on Friday, seeks “to place assets and accounts of Argentina, understand how Argentine moves its assets through New York and around the world, and identify with precision the places and the timing in which those funds could be subject to an attachment.”  In summary, what NML is seeking is to know the system by which Argentina’s funds circulate.

 

In that sense, the court order seeks documents “related to assets and accounts of Argentina in Banco Nacion” and defines Argentina as “its agencies, ministries, political subdivisions, representatives and other persons that act on behalf of Argentina.”

 

“The court order has no territorial limit whatsoever,” the ruling states, including an analysis of the legal situation in some countries, including Spain, Bolivia, Brazil, Chile, Paraguay, Panama and Uruguay.

 

“Even if foreign laws prohibit an institution to deliver the requested documents, this court can in every way demand this delivery,” Griesa says, strongly criticizing Banco Nacion for its “bad faith.”  “Banco Nacion says that it acted in good faith because it delivered all the documents it could without violating foreign laws.  However, this court has already determined that Banco Nacion acted in bad faith by not presenting, for more than a year and a half, its arguments about how foreign law prohibits the delivery of documents.”

 

Certainly, this insistance by Griesa has come only 17 days before the hearing that will take place in the Court of Appeals to determine when and how Argentina must pay the vulture funds 100% of what is owed them.