Lead Articles:
La Nacion: “The Italian bondholders ask the U.S. to have them be part of the discussion over the debt”
El Cronista: “Battle with the holdouts: warning that June payments could be affected”
El Cronista: “Electoral agitation in Venezuela plays in favor of Argentine debt”
El Cronista: “The increase in participation in the IMF will add US$1.6 billion to the reserves”
DEBT DIGEST (to be translated later today):
AMBITO FINANCIERO:
OTHER NEWS ITEMS:
· El Cronista reports that Le Matin, a Swiss newspaper, is reporting that an investigation has been opened in Switzerland about the Lazaro Baez money laundering scandal, after the Swiss government received a fax with a list of Argentines – including Baez – who are suspected of stealing public funds and placing them in Swiss bank accounts. Cronista doesn’t mention the source of the fax.
· Several papers report that the SEC has filed documents accusing Ralph Lauren of paying over half a million dollars in bribes to Argentine customs and government officials to get their products into Argentina without border inspections.
· Friday’s raid on SGI’s offices in Puerto Madero, suspected of money laundering as part of the revelations on the Lazaro Baez scandal being exposed by Jorge Lanata, has yielded “positive results”, La Nacion reports. In a separate story, money traders in the local Buenos Aires markets told La Nacion without attribution that laundering milions of euros out of Argentina, as SGI is accused of, would have taken “a big infrastructure” to pull off, and probably involved some banks. Some reported that they were approached around the time that Leonardo Farina’s name began to show up on celebrity gossip shows to participate in a scheme to take euros out of Argentina outside the official circuit Meanwhile, the Uruguayan Congress begins hearings today on what part of the scandal may have transpired through that country’s banking system.
· Planning Minister Julio de Vido, in a speech to mayors in Santiago de Estero province, accused the pot-banging protestors of last week of “banging pots here in order to go to Miami,” while the “workers, the retirees and the pensioners spend money in the local economy.”
· La Nacion quotes from a Bloomberg story about a JP Morgan report which warns that Argentina “might suffer the worst drop in its international reserves in a decade” due to the slackening inflow of dollars from agricultural exports combined with a further draining of reserves. The country could end 2013 with only $37.5 billion in reserves, but according to Economy Ministry documents the country’s total foreign debt stock will ascend to over US$50 billion by the end of 2014, leaving the end-of-2013 reserves covering only 75% of that stock.
· Pagina/12 reports that Axel Kicillof has denied a report in La Nacion yesterday that he and other members of nationalized companies, like YPF, representing state participation do not pay income tax on their director salaries. “I pay what corresponds to my income,” he said.
· La Nacion reports that Axel Kicillof had a role in the acquisition of planes by Aerolineas Argentinas from Brazil’s Embraer in 2009, which has raised concerns by the SEC in the U.S. of possible irregularities in the sale. Kicillof, who was an executive in the airline in 2009, recommended the purchase and there were no objections to the pricing, the financing or the technical conditions of the planes, the report notes.
TRENDING TOPICS/ARGENTINA on Twitter:
· “Miami” has been trending in the top 10 this morning, bolstering unrelated mentions of the word with tweets about Julio de Vido’s comments yesterday that Argentine middle class protestors “bag pots here to go to Miami.”
La Nacion
The Italian bondholders ask the U.S. to have them be part of the discussion over the debt
A group of investors filed before the court to express their position
Tuesday, April 23, 2013
By Silvia Pisani
WASHINGTON.- Now that the “vulture funds” rejected the possibility that the country would exchange their debt papers, a group of Italian investors filed before American court to “help it understand” that “the only path left” is the “payment of the total amount owed and its interest.”
They are mostly small investors. Retirees that put their savings in bonds. For that same reason their message of rejection suggests, now in the facts, a deflation of expectations by the government to seduce them with a cash payment up to US$50,000, according to what it said in its offer.
However, in an immediate reaction, the “vutlures” were opposed to their being heard. On the one hand, because that would give “more time” and they are fed up. On the other, because they don’t agree with the clear readiness by the Italians to “make more flexible” the ruling by Judge Thomas Griesa, under review by this court now, and whose full upholding they are defending.
The document from the Italians constitutes the first amicus curiae arriving at the Court of Appeals in New York after the funds NML Capital and Aurelius Management rejected the Argentine offer. But it might not be the only one.
They are filings that reflect the judgment of third parties that are not part of the litigation but who are asking the court to have the chance to issue their opinion.
Expressed in strong terms over the “recalcitrant attitude” that Argentina has in “ignoring” the courts, the document carries the signature of the investors represented by the attorneys of Duane Morris.
They are also known as the “me too”’s, in reference to the fact that they have paper in default and, equal to the “vulture funds”, didn’t accept the debt swaps in either 2005 or 2010. But different from them, they didn’t speculate, but bought at real value, according to what they said to the court.
Motives
The document reflects annoyance. “It fits to ask why Argentina would waste the judges’ time with a proposal that was already rejected,” or “why it seeks the protection of these courts if it does nothing more than repeat that it will ignore rulings that it doesn’t agree with.”
In the only place where its opinion seems more flexible is in the possibility that the payment mechanism suggested by Judge Thomas Griesa can be modified.
The New York judge imposed an attachment – on the money that Argentina sends abroad to pay those who did accept the debt exchanges. That mechanism is one of the points under discussion and which is awaiting an opinion of the judges.
As LA NACION has been saying, the issue is decisive. If the attachment on those funds isn’t suspended, Argentina could again fall into default. The Italians seem to understand that. But they are not a party, only giving an opinion. “They are totally mistaken,” the ‘vultures’ say, rejecting this, as they want no more delays.
El Cronista
Battle with the holdouts: warning that June payments could be affected
Foreign banks warn that Discount payment on June 30 could be compromised. They find it unlikely that a change of jurisdiction can be orchestrated
Tuesday, April 23, 2013
MARIANA SHAALO Buenos Aires
The Court of Appeals will rule against Argentina in the lawsuit with the holdouts within the coming weeks and debt payments in June could be affected, according to analysts at different investment banks.
“The Second Circuit will decide about the case probably in the next six weeks. We will continue thinking that Argentina gave the court little to work with and few reasons to want to do it,” they said from the New York law firm neoyorquino Shearman & Sterling.
“While the courts are not operating with deadlines, it would not be a surprise that the decision is taken within a month. After Argentina has another window of up to three weeks to appeal and during that time we are thinking that the stay will remain, which will probably come by June. If the timing follows this way, the June 2 payment will be made while the one for June 30 runs more risk of being affected,” said Bank of America in its latest report. “The June 30 payment affects CDS contracts in September but not in June,” it specified.
As such, for economist Casey Reckman of Credit Suisse Group, “it continues to be possible that the decision is announced in time to put at risk debt payments with foreign legislation in June.”
Despite that in the last few weeks expectation in the market grew that the Argentine government will continue paying its obligations even with a contrary ruling that affects Bank of New York Mellon, investment bank analysts doubt that possibility.
“In recent days, bonds with New York law rose strongly. There was greater demand due to that investors saw that there could be an agreement in the case or that Argentina would be capable of changing the bonds’ jurisdiction. But we are not optimistic regarding that,” said Bank of America.
For the investment bank team, if Argentina gets a negative ruling from the court and decides not to pay the holdouts, “it’s unlikely that they find alternative routes to pay the swap bonds and it’s very possible that the CDS are activated.”
In this direction, the investment bank Exotix, specialist in illiquid bonds from emerging countries, made its opinion known: “The market is underestimating the difficulty of the operation. How easy can it be to implement that swap if some of the parties that will have to be involved to facilitate it are obliged by the court to stay on the margin? Could that swap really be done? And if so, it would take time and put Argentina at risk of not being able to make payments while bringing the process forward, which would bring it to technical default.”
“The court will rule against Argentina and the payments on bond coupons with foreign law will be intercepted at Bank of New York. It’s almost impossible or Argentina to divert the payments and the probability that the court issues a ruling in Argentina’s favor is zero,” said Jorge Piedrahita of Torino Capital, to El Cronista.
The insurance against default will be executed if the Argentine government doesn’t make a payment. For Bank of America, if the court issues a ruling against Argentina and lifts the stay order, it would risk the June 30 payment of US$345 million on the Discount, which could bring a technical default and activate insurance against non-payment. Yesterday, bonds under New York law had minimal variations as well as one-year and five-year CDS, as the market was assuming.
El Cronista
Electoral agitation in Venezuela plays in favor of Argentine debt
Tuesday, April 23, 2013
The political agitation that was set off in Venezuela with the election of Hugo Chavez’s successor made it so investors in emerging countries’ debt turned back to Argentina and are reducing the cost of relative debt to the maximum.
This month, the yield on dollar bonds from Argentina fell some 2.56% over the debt from the Venezuelan government, the biggest drop since May 2009. The extra three points in interest that are requested today from buyers of Argentine debt represents a minimum since January, according to Bloomberg.
Argentine bonds, which still have the highest yields among emerging markets with 13.84%, are gaining favor of investors in fixed rate instruments from developing countries after Nicolás Maduro refused a recount of votes after winning by only 1.6% over Henrique Capriles on April 14, and set off protests which left eight people dead.
Speculation is also growing that Argentina will find a way to pay holders of bonds even after losing to rebel bondholders from the 2001 default that are seeking payment in a U.S. court.
“The flow of money is going from Venezuela to Argentina,” said Vinicius Pasquarelli, debt trader for emerging markets at Standard Credit Group. “Investors and those that have cash in Venezuela are fleeing that country and going to Argentina, because it offers a better return and ,at the moment, less political risk.
El Cronista
The increase in participation in the IMF will add US$1.6 billion to the reserves
The House of Deputies last week approved the increase in Argentina’s quota in the organization. It had been negotiated by Lorenzino and Cosentino in Washington.
Tuesday, April 23, 2013
CARLOS ARBÍA Buenos Aires
From the increase in participation by Argentina in the International Monetary Fund (IMF), negotiated in Washington and approved last week by the House of Deputies, Argentina would receive US$1.6 billion – the amount that is equal to 1,070 Special Drawing Rights (SDR) – in transfers from the organization. These transfers would help the government recover reserves, which broke through the floor of US$40 billion last week and hit the lowest point in six years. While judicial reform was being debated last Wednesday, the lower House approved the raising of Argentina’s participation in the IMF at the last minute.
It would seem this increase in the quota won’t have monetary effects on international reserves nor the local fiscal accounts, according to what was in the presentation by pro-K House Speaker Roberto Feletti. “This means that Argentina’s annual quota is going up to US$1.6 billion, since its participation will go to US$4.78 billion, which is to say US$3.187 billion in special drawing rights,” Feletti explained.
Economy Minister Hernan Lorenzino, Finance Secretary Adrian Cosentino and Argentina’s director at the IMF, Sergio Chodos, took advantage of the World Bank-IMF assembly days ago to negotiation this increase in the country’s participation. It was in the most absolute secrecy and with the vulture funds’ backpack.
For this increase, Argentina will get some 1.07 billion in additional special drawing rights, which is equal to US$1.6 billion. That will mean a direct increase in BCRA reserves, as happened in 2008. For that increase to come together, it only requires the authorization of the U.S. government.
The phrase that Lorenzino used during the IMF-WB meeting in Washington was that “the current composition of the Fund doesn’t reflect the global economic reality” and for that they demanded “more participation for the new emerging economies,” accounting for the government discussing the rise in the membership dues in the IMF. It’s a negotiation that the government also held in 2008, when the Central Bank reserves increased as a consequence of this capital contribution.
During the House debate, the only one who came out to question Feletti was CC Deputy Alfonso Prat Gay who said: “The government is trying to get its hands on some US$1.6 billion to have a better time until 2015.” And he complained that, in that manner, “they are going to increase the reserves fictitiously as a consequence of this contribution of capital.” As such, other opposition deputies said that the government could use that money to help YPF. “The truth is that Feletti always gets ahead of us and this time did it again and played us like when he presented the changes to the Capital Markets Reform law at the last minute,” said an opposition deputy.
The excuse that Feletti gave for increasing the participation was that “this way it would increase the weight of emerging countries in the decisions of the international credit organization and this will not have any cost for the country because reserves will not be used.”
Keine Kommentare:
Kommentar veröffentlichen