Ambito Financiero Alert: vulture funds seek attachable assets with Griesa’s support

Lead Articles:

 

La Nacion: “Reopening of the debt swap will not solve the problem of the holdouts, they say”

 

Ambito Financiero: “Alert: vulture funds seek attachable assets with Griesa’s support”

 

Clarin: “The vulture funds pressure the banks for data about Argentina”

 

La Nacion

Reopening of the debt swap will not solve the problem of the holdouts, they say

 

Tuesday, September 10, 2013

 

By Martin Kanenguiser

 

Opposition economists have their differences in support of the reopening of the debt swap, but they unanimously believe that both that idea and a possible change from the United States to Buenos Aires for the legal jurisdiction governing various bonds will not solve the problem with the bondholders in default, believing it to be a legacy to be resolved by the next government.

 

In a dialogue with LA NACION, Martín Redrado (advisor to Sergio Massa), Federico Sturzenegger (candidate for PRO), Gerardo Milman (candidate for UNEN), Claudio Lozano (People's Union) and Néstor Pitrola (FIT) gave their opinions about the success that government initiatives in Congress might have in the short term, and with the creditors when the offers are launched.

 

Today, the reopening of the swap will be taken up in a plenary session of the committees of the House of Deputies - with the team of Minister Hernan Lorenzino - to approve it tomorrow on the floor.

 

The economists said that there should be, along with the reopening of the swap and the lifting of the lock law, an active "financial diplomacy" with the 93 percent of the bondholders who entered the swap, and with other countries, to find a solution for the debt that has gone unpaid for more than 12 years.

 

For Redrado, former President of the Central Bank, it will be key to "leave the swap open, delete article 4 of the bill submitted to Congress and the lock law, which would reverse the perception generated by the attitudes of the government from 2010 to date.”

 

The other key point, he said, is to use "financial diplomacy" with bondholders who entered swaps [in 2005 and in 2010] to petition the government for a change of address of payment over the uncertainty generated in New York by the American judiciary. But Redrado admitted that, given the hostility of some investment funds who are suing, "the next government must insist that it will only offer the same as the rest of the bondholders.”

 

Meanwhile, Sturzenegger, President of Banco Ciudad, argued that "the issue is not closed, since there is still the instance of the Supreme Court" of the United States. "We have always argued that what is right is that the holdouts should not collect more than what those who agreed to swaps have already collected. In reality, we have consistently maintained that position. In fact, we suggested it when the government rejected it and we are glad to see that now it has followed the path we proposed,” he said. For this reason, Sturzenegger pointed out that the PRO will not be opposing "this strategy which aims to normalize Argentina’s relations with its creditors, since Argentina needs to normalize its relations with the rest of the world.”

 

However, the economist argued that, given the problems on the external front, "the government of Cristina Kirchner will leave behind a country with a lower-level of explicit borrowing, including the holdouts, but a large amount of contingent debt, like pension debts, a lower level of assets, like the reserves of the Central Bank and infrastructure and a huge credibility deficit.”

 

Milman asked for "the joining of all parliamentary forces in this task and working on a sovereign debt restructuring standard in multilateral forums and agencies, to end the discursive recklessness of the government in domestic forums,” in reference to the double-talk kept up by the government on this issue.

 

For this reason, he said: "We must end with the improvised bursts of announcements that increase the likelihood of a new adverse court ruling in the United States,” which would lead the country into another default if the stay, which was granted by the appeals court in late August, is lifted. The next government will inherit a problem "because, fruit of the bullying of the American judiciary, the debt will continue to be a sword of Damocles,” he added.

 

For his part, Claudio Lozano said: "We are going to oppose the reopening of the swap and the suspension of lock law, because it doesn’t solve anything; as the President said: we are serial payers, but we have to remain clandestine to other countries.”   Lozano proposed "investigating part of the debt, including what was swapped in 2010, which is not part of history, but from their own administration."

 

Meanwhile, Pitrola said that with the attitude of the government, "the discourse of debt reduction has been dropped and we again have a debt crisis, because the maneuver to change bonds with American law to Argentine law is also of doubtful viability.”

 

The opinion of the economists:

 

·         Sturzenegger / Candidate from the PRO

“The government will leave behind huge debts of contingency and credibility.”

 

·         Martín Redrado / Adviser to Sergio Massa

"The lock law must be eliminated to improve perception among creditors.”  

 

·         Gerardo Milman / Candidate from UNEN

"The debt will be a sword of Damocles for the next government.”  

 

·         Claudio Lozano / Unión Popular

"We pay everyone, but we are clandestine.”

 

 

Ambito Financiero

Alert: vulture funds seek attachable assets with Griesa’s support

 

Tuesday, September 10, 2013

 

by: Carlos Burgueño

 

The government warned all embassies about potential actions from the vulture funds on Argentine financial and real assets abroad. According to the information that arrived from New York, lawyers who represent the country in the courts of the United States warned about suspicious movements by their colleagues that represent and advise Paul Singer’s Elliott Fund in the court of Thomas Griesa, asking for writs signed by the judge mentioning district and appellate court rulings, and will support attachment actions around world with the indirect approval from the judge. The vulture funds know that actions of this type are already closed in the United States, where decisions from the Supreme Court defend the "intangibility" of the reserves of the Central Bank and the funds from companies and partnerships even if they have the state as the sole shareholder. The problem that Cleary Steen Gottlieb & Hamilton’s lawyers perceive is that with a writ signed by Griesa, Elliot could move ahead in some international courts, like in England.

 

The lawyers’s fear is justified by the jurisprudence of the British system, which between the end of the 80s and throughout the 1990s supported tough attachments from vulture funds of all kinds, color and coat of arms on assets in developing countries.  Mentioned are Congo Brazzaville, Central African Republic, Sierra Leone, Belize, Kazakhstan, Lesotho and Liberia, among other cases in which before situations of defaults, the English courts authorized attachments on commodities and fuels (petroleum, diamonds, fruits, sugar and even animals). Over time these kinds of cases began to decline to almost disappear, starting with the intervention of international financial organizations which protected the credits. However, and to be based on the British system of jurisprudence, none of the rulings were in favor of debtor states, so they could be used in the case of Argentina. In general, more since the capture of the Frigate Libertad in the second half of last year, Argentina has been on alert around the world against possible attachment. In fact, it is difficult to fly Tango 01 to foreign lands potentially apt for attachments.  Also protected are money movements of the Central Bank, which are practically concentrated in the Switzerland and Belgium financial systems, since there are favorable decisions for the country both in Basel and Brussels. The particular fear is that physical assets are at risk, such as embassies, military offices, cars or oil shipments of YPF.

 

During the weekend the team of Economy Minister Hernán Lorenzino took care of analyzing the possibility, reported Friday by this newspaper, about whether Griesa could even move  on Argentine assets in the United States, beyond the payment of interest on the debt in default protected for the time being by the "stay" until the U.S. Supreme Court decides if it takes or rejects the case against the vulture funds. On Monday, the Finance Secretary Adrián Cosentino ruled out this possibility, assuring that there was no information on which Thomas Griesa had authorized vulture funds to investigate whether there are attachable assets of Argentinian companies abroad.

 

"There are no references nor decisions from Judge Griesa from which it can deduced that there are new attachable assets” of Argentina’s, Cosentino said.  It is true that lawyers for those funds continue to search for Argentine assets abroad which are susceptible to attachment and which are outside the scope of the law of sovereign immunity of the United States, which are those of a commercial nature, and they have not found any so far. Cosentino acknowledged that through this procedure, he pointed out, "the vultures are looking for two things: mainly to find assets of the Argentine Republic abroad, through the review of information and documentation that may belong to different global financial institutions and, secondly, to determine if there are links between Argentina and entities or companies such as Enarsa, YPF, BCRA, among others, determining that they are an 'alter ego' of the Republic.”  Cosentino recalled that "the District Court already decided the issue of BNA and Enarsa, having rejected that the alter ego relationship exists in those cases ", i.e., that they act as part of the national Treasury.

 

 

Clarin

The vulture funds pressure the banks for data about Argentina

The demand details from all financial operations that could be attached

 

Tuesday, September 10, 2013

 

Judge Griesa gave the green light to the vulture funds for them to demand from five banks (Citibank, Barclays, Deutsche Bank, Bank of America and BNA) to submit all information on Argentina’s financial movements.  If they don't, they are exposed to being sanctioned.

 

Documents that banks must deliver include bank accounts, real estate transactions, transfers and investments of the 393 entities that according to the holdouts are defending Argentina. During the hearing of September 3, the lawyer for Aurelius and Blue Angel, Daniel Rapport, told Griesa that 70% of these entities are ministries and secretariats.  Thirty-six are diplomatic and military delegations and 83 are self-governing entities.

 

The funds already tried to get the information they need in order to know if there are attachable assets through which they can collect on rulings in their favor. But they were not successful. Argentina, in line with the banks, filed a motion for the measures that were presented to be annulled. Judge Griesa ruled against the annulment on Tuesday.

 

During the hearing, Rapport explained that five banks operate under the jurisdiction of New York. "This means that if they do not provide the information they could be subject to sanctions," explained Charles St Charles, an attorney in Washington, to Clarin. "If the president, the head of operations and the risk manager of any of these entities want information from their subsidiaries abroad, they can do it," said Rapport. And he added that they are also seeking information on all types of business with Argentina from these banks, including any discussions about possible loans or bond issues.

 

On behalf of Argentina, Carmine Boccuzzi argued that the country had already provided much of the information being demanded. And the lawyer from Barclays, Croffoot-Suede, asked Griesa to allow Argentina to continue to giving the information and that only afterwards the banks be asked to give their in a more restricted way.

 

James Kerr, Citibank's lawyer, argued that they had already offered to the vulture funds to give detailed information about Argentine financial transactions via SWIFT (Society Worldwide Interbank Financial Telecommunications), a service by which more than 14,000 banks operate in a secure manner.

 

"We offered to provide them information that will allow them to follow the path of the money, which is what interests them," added Kerr.

 

He said that the intention was to put forth "a way to decrease the number of jurisdictions where the pursuit of information has to take place. After all, Citibank, for example, has offices in more than 100 countries. And some of these countries have laws that protect bank secrecy."