Lead Articles:
Ambito Financiero: “2010 offer is remixed to present to the vultures”
It will include Par bonds, but only for the original debt (around US$450 million)
Ambito Financiero “New seduction plan for the support of Judge Parker”
La Nacion: “U.S. court will not reverse Griesa ruling”
Denied Argentine appeal for a plenary of judges to re-examine what the lower court decided
Clarin: “Vulture funds: setback for the government in U.S. court”
Request rejected for a court to review a ruling against it. Now, the three judges will decide, or the Supreme Court
Ambito Financiero
2010 offer is remixed to present to the vultures
It will include Par bonds, but only for original debt (around US$450 million)
Wednesday, March 27, 2013
By Guillermo Laborda
The economic team has already decided what will be the last card to play in the lawsuit against the creditors, principally the vulture funds in New York. It was confirmed that it will include in the offer demanded by the Court of Appeals in New York the Par bonds, coming due in 2038, but only applicable to the original debt at the moment of default, which is to say, around US$450 million. For the other US$1 billion that completes the total in dispute, basically a Discount bond will be offered. All of that will therefore turn on the proposal of the swap of 2010.
The rejection of the “en banc” appeal yesterday only two days before the last deadline for presenting the offer of payment is not a coincidence. It was a message from that court on what was seen as a “last chance”. There will be no more rounds. They could attempt alternative routes like the Supreme Court, but they would only eventually gain a few months. The underlying question will be already decided. The chances of a favorable result for the country with this scheme are low. They could be greater if a Par bond is launched for the total in play, which is to say US$1.4 billion. But that option is not included in the terms that will be presented tomorrow by the economic team that is led by Hernan Lorenzino.
Underneath it all, being in a situation in with different circumstances, getting a ruling in favor of the country over the basis of the lines of the swap of 2010 is almost impossible. Yesterday, the economist from Morgan Stanley, Dan Volberg, said in a report via email to his clients that “we doubt that the court would be satisfied with the proposal and we see a high risk of disturbance in the markets for the coming months.”
The underlying key passes by the obstacle that could be imposed on the payments to those who entered in the swaps of 2005 and 2010 through Bank of New York Mellon (BONY). It is what will decide whether the country enters into technical default or not. For the statements of the judges during the hearing of February 27, the fate of BONY is already in play. Lost. But the final sentence remains to be seen. Starting then they will enter into different alternatives of payments to bondholders in different markets avoiding New York. The official message to go from “the debt is being paid” to that. The detail is that it will not be in the main market of the financial world and that outside the stipulation in the conditions of the debt emission. The lowering of the rating by the risk agencies will then come upon that scenario.
The official position is unmovable and more will not be paid than what was offered in the swaps to the vulture funds. It is not arbitrary, but there were polls taken by the government that reflected that a high percentage of society rejects honoring the claims of the vulture funds. So what happened with the expropriation of Repsol’s shares in YPF would be repeated, something that ended up shaking the markets, but the polls backed it. And definitively, it’s what moves policy.
Ambito Financiero
New seduction plan for the support of Judge Parker
Wednesday, March 27, 2013
By Carlos Burgueño
For the economic team and the firm that represents Argentina in the lawsuit against the vulture funds – Cleary, Gottlieb, Steen & Hamilton (CGSH), going back to concentrating on getting the positive vote of Judge Daniels Barrington Parker is the right strategy. It’s the vote of this Republican; the one who now will determined if Argentina’s proposal to reopen the debt swap in conditions similar to the one in 2010 is accepted or rejected.
According to the information handled by the firm CGSH and the economic team of Hernan Lorenzino, Argentina already has one vote in favor on the court, but also one against with which the final decision will be Parker’s responsibility. Backing the proposal of the debt swap will be Judge Rosemary Pooler. A Democrat, who arrived in the court by appointment of President Bill Clinton in 1998, gave support in the February 27 hearing to the possibility of a reopening of the swap. As a counterpoint, the other female judge of the court, Republican Reena Raggi, gave unequivocal signs of rejecting Argentina’s position.
With this background, the cannons are again pointing at Parker. From the firm of CGSH it is said that it was this judge that wrote the ruling in favor of allowing the country to present a swap offer, as well as the one that rejected the alternative that the 13 judges of this higher New York court to vote.
Blackman and Boccuzzi were, also, investigating the jurisprudence in previous rulings from Parker, and reached the conclusion that the oral arguments and briefs on the new swap should include direct references to the harm that a negative ruling for Argentina could provoke in the business of placing sovereign debt on Wall Street.
They also recommended that it speak to the negative consequences for the Argentine economy in upholding the lower court ruling from Thomas Griesa. According to CGSH’s idea, to have the arguments to convince Parker it would be more efficient and effective than advancing on all the judges of the higher court in New York.
If Parker accepts the argument and backs a third swap, Argentina will have won 2-1. Yesterday, the Court of Appeals in New York rejected Argentina’s request to review before all the judges the adverse ruling by a panel of that court against the South American country in the case against the vulture funds for its debt in default.
La Nacion
U.S. court will not review Griesa’s ruling
Refused Argentine appeal for a plenary of judges to re-examine what the lower court decided
Wednesday, March 27, 2013
By Silvia Pisani | LA NACION
Nobody in New York had many expectations on the matter. What is clear is that the Court of Appeals yesterday refused one of the recourses that the government asked for in its case against the so-called “vulture funds”, a determination that seems to make the alternative of a new debt swap grow all the more.
"With this, more paths for Argentina will close,” said Richard Samp, attorney for Washington Legal Foundation, to LA NACION, anticipating that possibility.
Argentina had bet on the possibility that the plenary of 13 judges of the Court of Appeals would review the ruling in the case by which Judge Thomas Griesa condemned the country to pay US$1.3 billion to the vulture funds. It’s seen as a recourse rarely conceded.
The firm of Cleary Gottlieb Steen & Hamilton, which represents our country in its litigation with the creditors, trusted that – due to the “international impact” that the case is assigned – our country’s ruling could be one of those rare exceptions. But’s it’s clear that it was not.
The so-called “en banc appeal”, once denied, means one less procedural recourse among an increasingly scarce number left for the court, already turning into a “pilot case.”
"It’s a shame that it was not granted because there are many institutional questions that are in play,” said attorney Eugenio Bruno, of the firm Garrido, expert in international financial conflicts. “I believe that the court was mistaken to deny it,” he said.
Argentina’s hopes are closed on the sluggishness that the court always has in making its communications: just one line, with the signature of the administrative officer. And the issue is over.
The options that open up
Now, what is left is to know what the payment plan is for the creditors that Argentina has to present this week, as the court required on the 1stof this money. Or if, failing that, it decides to throw out that alternative and appeal directly before the U.S. Supreme Court.
If it decides to appeal before the Supreme Court, it’s very possible that, to do so, it will have to first deposit a guarantee for an amount close to that which is in dispute, which is US$1.3 billion, said local attorneys. The other option is that the government effectively present a precise payment plan to the creditors, as required by the three judges deciding the case.
"A precise plan, with its schedule, commitment to pay and guarantees,” said the judges. The requirement was made after Argentina’s attorney, Jonathan Blackman, insinuated the possibility of a new swap for the bondholders that didn’t accept the two that were already offered.
But, for that, the clock is already running. The court gave a deadline of two days from now to have that documentation in its hands. What remains to be known now is what Argentina’s response is.
Another blow for ‘made in NY’ bonds
The judicial rejection to Argentina’s request for the plenary of judges of the U.S. Court of Appeals to review Thomas Griesa’s decision that obliges the country to pay more than US$1.3 billion to the holders of debt still in default seems to have served as a bad omen for some investors.
So it allows to suppose the change in trends in prices of bonds in dollars and placed under U.S. law in teh market just after the decision came out, despite it being seen as something most traders had already factored in.
The undoing of positions with this group of bonds (among them the Par and Discount from the swaps, the coupon in U.S. dollars and the Global 17, issued in 2010 as part of swap II) put an end to the rebound that all those assets was enjoying in the local market by which, at the end of the day, ended with new losses, three of them at the end of the day.
"What was notable was an additional push to the arbitrations in favor of local bonds in dollars,” said a trader, in reference to a trend that has been deepening as the deadline approaches for the country to present a concrete payment offer..
As such, it was not unnoticed yesterday that the volume of trading in debt warrants on the Buenos Aires market was the biggest of the year, with buys focused on the Boden 2015 (+1.1%) and the Boden 2013 (+2.1%), two bonds in dollars but emitted under local law.
Clarin
Vulture funds: setback for the government in U.S. court
Request rejected for a court to review a ruling against. Now, three judges will decide, or the Supreme Court.
Wednesday, March 27, 2013
By Ezequiel Burgo
The news came three days before a key hearing in the lawsuit that Argentina faces with the vulture funds in New York. Yesterday, the Court of Appeals for the Second Circuit of that district rejected a request from the government for the 13 members of that court speak up on the case.
“It’s bad news,” said ex-finance secretary Guillermo Nielsen.
“Sets the tone for Friday”, says Daniel Marx, another ex-head of that office in Economy.
Argentina’s fate seems to depend now on the three judges that have taken up the case. They are the same ones that held the February 27 hearing when the parties gave oral arguments: Reena Raggi, Barrington D. Parker and Rosemary Pooler. In case the judges uphold Argentina having to pay the vultures US$1.33 billion, the recourse left for the country – to reverse the ruling – would be the Supreme Court.
Last October Raggi, Parker and Pooler upheld a ruling from Judge Thomas Griesa: Argentina would have to pay the vultures US$1.33 billion. The government, in addition to appealing the decision, asked that the case be reviewed not by the three judges but by a complete court (a recourse known technically as ‘en banc’). Yesterday, the latter was rejected.
“The likelihood of that happening was high,” Marx explains. It’s that in recent years it has only accepted 7 out of 27,000 en banc requests.
The news yesterday has a double impact for the government.
First, “it means that it’s hard for the court to rewrite the ruling,” Nielsen said.
Second, it comes three days before when the country explains to the Court of Appeals when and how it will pay the debt with the vulture funds and a group of retail investors with bonds in default.
The attorney from the Garrido Firm, Eugenio Bruno, said that the ruling is “mistaken and hasty because the 13 judges would have given the judicial weight that the case deserves.” For Marcelo Etchebarne, of the firm of Cabanelas-Etchebarne-Kelly, “the message is clear: the Court of Appeals supports these three judges before the final ruling is settled.”
President Cristina Kirchner said that the country will pay the vulture funds. But she recalled that she will not give them better conditions than those who entered the swaps of 2005 and 2010. Argentina, if it offers to pay US$1.33 billion in installments to the vultures, would be in violation of two clauses that are part of the contracts of the 2010 swap.
However, a calculation by economist Ramiro Castiñeira, of Econométrica, said that the government could acknowledge 100% of the debt and, even so, “not offer better terms than were accepted in the swap in 2005 and 2010.” This would be because the current value of a Par bond without a haircut at 30 years would be 38 dollars versus the 47 dollars that the paper is worth from the 2010 swap.
A well-known analyst that asked not to be named said that “the backdrop is that two-thirds of the market thinks Argentina is headed toward a technical default.” Yesterday, the cost of insurance against default for Argentina rose 374 basis points, which is the highest rate since March 1.
In February of last year, Griesa found that Argentina violated the law known as “equal treatment” (pari passu): the country didn’t pay these investors what it did pay the bondholders that entered the swaps. The court, made up of three judges, upheld that ruling. And it ordered a final hearing on February 27. Now, this Friday, the court will close another chapter of this saga.
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