Lead Articles:
Ambito Financiero: “Vultures: summits in NY and London over Argentina”
La Nacion: “David Martínez: "At some point there will be a negotiation with the holdouts”
La Nacion: “The IMF is conciliatory with the country over the new price index”
Ambito Financiero: “Mission to Washington returns and the new CPI and ICSID are sped up”
El Cronista: “The IMF decides at the end of the month on a ‘pardon’ for Argentina over INDEC statistics”
OTHER NEWS ITEMS:
· The lead story across all independent newspapers today is that Guillermo Moreno was indicted by a federal judge yesterday on charges of abuse of power. The charges stem from his “arbitrary, systematic and persistent” attacks on private consulting firms, applying heavy fines and other measures to “silence” them. He was ordered to stand trial, issued a 50,000 peso bail bond and will remain free. If convicted, the maximum sentence is 2.5 years in prison and a ban on public service employment for five years.
· Clarin reports that new official figures from the government indicate that Argentina’s public debt has risen to the equivalent of 44% of GDP. The total amount rose by US$13.402 billion between June 2012 and the same month this year. Almost 60% of the debt is held by public entities like ANSeS, the BCRA an Banco Nacion.
· La Nacion reports that the government is considering making a unilateral payment of US$1.5 billion for the expropriation of Repsol. The idea would be to deposit the amount into an account of Banco Nacion in Argentina in compliance with local law, to “show its willingess to negotiate.” But Repsol indicated it would view the move as “hostile” and would not accept it, continuing legal action in international courts and bodies, like ICSID. Repsol is demanding US$10.5 billion for the expropriation.
· La Nacion reports that FocusEconomics published a report on its website (www.focus-economics.com), where a consensus of national and foreign economic consultants and bank analysts shows that inflation should reach 29% in 2014.
· In a speech last night, Cristina raised eyebrows when she lavished praise on the U.S.-owned cable provider DirecTV (a local rival of Clarin’s Cablevision), saying it is “the best television service” and that she is a subscriber, and she sees its dishes “in the neighborhoods, in the towns” and this is a sign of the country’s economic strength, and that media portrayals to the contrary are “brainwashing.”
TRENDING TOPICS/ARGENTINA on Twitter:
· “DirecTV” is trending this morning with many poking fun at Cristina’s endorsement of the American cable carrier yesterday.
Ambito Financiero
Vultures: summits in NY and London over Argentina
Wednesday, September 18, 2013
By Jorge G. Herrera
The interest in the outcome of the legal battle against the vulture funds in the US courts has captured the imagination of experts and investors who can't let any seminar escape from anticipating the next steps of the courts, the litigants, and the implications on contracts of insurance against default.
The market is aspiring to understand Argentina’s prospects before a review of the case by the U.S. Supreme Court after the last decision of the Court of Appeals for the Second Circuit in favor of NML Capital and Aurelius Capital.
It was so last Monday at the offices of the EMTA (the entity that brings together traders and investors from emerging markets) in New York, where an important group of funds, investors, banks and analysts met to hear the views of five experts in litigation in emerging markets. An expert on the Argentine case, Bruce Wolfson (of Bingham McCutchen), moderated the panel, and sharing their opinions were Steven Froot (Boies, Schiller and Flexner), Robert Cohen (Dechert), Antonia Stolper (Shearman & Sterling), Marco Schnabl (Skadden, Arps, Slate, Meagher & Flom) and Richard Samp (Washington Legal Foundation).
According to Wolfson, in general the speakers agreed that it is very unlikely that the Supreme Court will accept the first request from Argentina for "certiorari" (meaning "to be fully informed" and it is the power of a court to review cases at their discretion) with respect to the decision of the Court of Appeals from October 26, 2012. "Argentina itself suggested to the Court to wait until it files a second petition with respect to the decision of August 23,” said Wolfson to this newspaper. They also said it’s unlikely that the Court will decide to accept or reject the second request of the Argentina before mid-2015, even later if the U.S. government participates through the "Solicitor General" (a kind of attorney for the government). Of course, that speakers offered different views on the possibility that the Court might or might not invite the government to participate and, should it do so, on the likelihood that it will support Argentina. In this regard Wolfson explained that "the participation of the government means a further delay of about four to six months" and added that "the government's support is key to Argentina, but does not ensure a positive result.” It was also emphasized during the seminar that the order of Judge Thomas Griesa of March 5, 2012, prohibiting certain activities by Argentina to evade a possible final ruling, including changes in the form and place of payment, remains in force. It was said that to date, NML has not asked the Court of Appeals to lift the suspension (stay) of the decision of August 23, but it reserves the possibility to do so if measures adopted by Argentina justify it.
"I think that they all agreed that the appeal to the Supreme Court ("cert petition") is going to be rejected for being premature. I also think that faced with the second appeal that will come after the rejection by the Court of Appeals of the petition for "rehearing" or "hearing en banc", it’s unlikely that the Court will ask for the opinion of the Solicitor General. Consulted by this newspaper, Antonia Stolper explained that "the Court of Appeals has many judges. The panel that decided the case has three, which is normal, then a "hearing en banc" is a request by Argentina that all judges who are members of the Court listen to the case. In this Court, it is very infrequent that the judges get together "en banc" to hear a case."
In a dialogue with Ambito Financiero, Marco Schnabl said that "the Court usually asks for the opinion of the Solicitor. I would say that the likelihood for the Court to ask for his opinion is 30%, which is already more than what usually takes place. If the Court asks for his opinion, I think that it is likely that the Solicitor won’t support the position for review, and if so it would not take away cards on the underlying issue (he can support the petition for review, but not give an opinion about the underlying issue). If the Solicitor supports the review, the likelihood that the Court will take it is high, 80%.” The expert argues that "the key is when the Court of Appeals decides on the second petition from Argentina, from there the government has 90 days. If the petition to the Court succeeds, it all points toward being resolved in 2015.”
Now on September 30, the appointment is set for London at the Sofitel St James Hotel where EMTA, together with TPCG, convenes another summit of experts.
La Nacion
David Martínez: "At some point there will be a negotiation with the holdouts”
Wednesday, September 18, 2013
by Carlos Pagni | LA NACION
The government’s strategy against creditors that are suing in the courts of New York (holdouts) is subject to generalized legal and financial criticism. However, David Martinez, President of the Fintech investment fund, believes that this strategy is correct. Fintech is one of the large holders of bonds restructured in 2005 and 2010. Those bondholders have ended up being threatened by judges in New York with the possibility of a default, if Argentina does not also pay the holdouts. Martinez explained in an interview with LA NACION that he approves of the official strategy.
-There is a widespread opinion that the strategy of Cristina Kirchner against the holdouts is mistaken. You believe otherwise. Why?
-Yes. I think her strategy is 100% correct. But to understand it you have to see the whole process. Since the outbreak of 2001, when Argentina went into default, going through the sacrifices it made to recover, up to the current situation, in which a miniscule group of highly specialized litigants are aiming to collect 100% of their debts at any cost. When a country goes into a major crisis, all contracts cede to reality. In the Argentina of 2001 banking, commercial, wage contracts were broken, those of the concessions for public services and also public debt. All of them. In Europe, as a result of the current crisis, wage contracts and pensions have been broken. The entry by a country into these macrocrises always leads to grand renegotiation that affects everyone. Everyone must make concessions and sacrifices to rebalance things in benefit even of its own creditors. But there is a minority here that wants to take advantage of the concessions and sacrifices that others are making. For that, they have the country and investors that did agree to renegotiate their loans as hostages.
- But it was the country that went to the courts of New York. It wasn’t invited to go. And thanks to that it was offered a more reliable jurisdiction and paid less interest.
-I'm not saying that they don’t have legal title to sue or that the courts are acting outside of their jurisdiction. But the government of a country has obligations with many more people than these litigants and should act with justice and fairness for everyone. Not to only adhere to the literal justice of a single contract. Why privilege these contracts over others? Indeed, judges can say, as they said, "you came here, I didn’t call you." But it is also true that the country went to that court before the crisis. The court is being used by a group of litigants as legal leverage to extract an advantage over the concessions granted by the rest. Ironically, the clause that they are using against Argentina is called pari passu, which means "equal conditions" or "in a fair manner". But the courts are applying it so that these litigants, and only them, collect first, and more than anyone else. The judges, particularly those in New York, have a culture that is inclined to look at the pure letter of the contract. It only leaves the government to have a fair reading of the problem and to take into consideration all those who made sacrifices for the country to recover: the banks, its savers, the foreign companies and the 93% of creditors who renegotiated their loans.
-Isn’t it a blunder to offer bondholders a change of jurisdiction when the U.S. Supreme Court must review the case?
-Not for anything. It shouldn’t matter to the Supreme Court, because it will be focused on the question of sovereign immunity. The President did the right thing at the right time. It is not clear that the Supreme Court will reverse the decision of the New York court. So, the President is warning that there are many investors overwhelmed by uncertainty. And she is offering them an anchor. She should clear up the confusion and fear and give them the certainty of Argentina's willingness to pay in the face of the distress created by a failure of the international legal system.
-Don’t you think that the country will pay an enormous price for repudiating the debt with the holdouts?
-I don’t believe that the President is repudiating the debt. At some point there will be a renegotiation with the holdouts. But for that one has to be safe from the current extortion, although the word sounds a little strong. The restructured bondholders, we who take the risk of the restructuring which restored Argentina’s capacity to pay, have been taken hostage to facilitate the situation of the holdouts. The market must evolve to avoid these situations.
-What does that mean?
-That the new bond issues have clauses by which, if there is a default, the agreement with a very wide majority of bondholders obliges those who do not want to accept a restructuring. They are contract models that were not in place in the era in which the Argentina issued this debt which is now under discussion. It is the same mechanism that private companies have to ensure that a small percentage of creditors do not jeopardize the continuity of the company. In this case, that of a country.
La Nacion
The IMF is conciliatory with the country over the new price index
After Lorenzino’s swing through Washington, and days before the presentation of the CPI, it called on maintaining relations: “The Fund hopes that the dialogue continues”
Wednesday, September 18, 2013
by Silvia Pisani | LA NACION
WASHINGTON- The International Monetary Fund (IMF) called on the government to "continue the dialogue" aimed at the creation of a new consumer price index which will replace the current measures on the cost of living and which has been the subject of an unprecedented motion of censure by the organization.
The position of the organization was revealed in a brief statement from spokesmen that confirmed the working visit that was held with a delegation of officials who travelled especially from Buenos Aires, led by Minister Hernán Lorenzino.
The effort, which the Ministry tried to keep secret, took place when only a few days were left before the deadline imposed by the body, the 29th, expires for Argentina to present "concrete improvements" on the official indicators that measure inflation and economic growth.
According to what LA NACION could find out, Lorenzino’s efforts were with his counterparts at the entity. At the close of this edition, there was no record of any meeting with its executive director, Christine Lagarde.
"We are ready to collaborate with the Argentina,” but it is necessary for the country to "adopt reliable and credible statistics" because "that is the rule for everybody," said the official weeks ago, after questions from LA NACION.
"We have a dialogue with the Argentine authorities with which I am satisfied. But we must continue working to complete it and conclude it," she said on the same occasion.
It was, until today, the last personal reference that Lagarde made on the question that the Fund has had with Argentina and which led to, last February, the entity applying a 'motion of censure' as a wake-up call over its statistics.
The statement yesterday states that "officials from the Fund and from the members of the economic team of Argentina held discussions within the framework of the ongoing dialogue between the IMF and Argentine authorities on the establishment of a new price index.” And it concludes with a call to move forward. "The Fund hopes that dialogue will continue,” it concludes.
While the 29th is the deadline set for the obligation to "count on reliable and credible numbers and statistics ," the Board of the organization will not take up the issue until November, the occasion in which it will make a pronouncement on the matter.
Lorenzino traveled on Sunday to this city and last night embarked on his return. The mission was also made up of Finance Secretary Adrián Cosentino, and the technical director of the National Institute of Statistics and Census (Indec), Norberto Itzcovich, together with the director for Argentina before the IMF, Sergio Chodos, as well as a group of aides.
The government declared its intention that the new indicator be ready for the first quarter of the year. Fund officials explained at the time that its mere existence is not enough but that "must respond to the standards" of credibility on the matter.
The Fund is maintaining the motion of censure on Argentina. But the intention both of the entity and our country is that this instance can be overcome. If it honors the requirements, the new indicator could be the way to do it.
Ambito Financiero
Mission to Washington returns and the new CPI and ICSID are sped up
Wednesday, September 18, 2013
by: Guillermo Laborda
In just 30 days, the government decided to open the exchange of debt in default for the third time, finalized an agreement to pay for rulings against it in the tribunals of the World Bank (ICSID) and the United Nations (Uncitral), and even held meetings with IMF technical staff over the sanctions that were as a result of measurements of inflation and GDP, which the INDEC performs. All in the framework of an unexpected shift due to the diversity of challenges, all of them in range of settlement. It remains to be seen if it happens. Time is short.
Minister Hernán Lorenzino met yesterday with the technical staff of the Fund in order to halt the process that may culminate in the suspension of Argentina’s right to vote in two semesters and, if not corrected it is, directly in its expulsion. On February 1, the entity had demanded that the country take "corrective measures" to cope with the lack of precision of the IPC-GBA and the data on GDP, without further delay, and in any case, at the latest on September 29, 2013. Today, Lorenzino is returning to the country. In two weeks, beyond the ultimatum of the 29th, he must return to Washington to participate in the annual Summit of the IMF-World Bank. "If the IMF is concerned about the credibility of the numbers, where are the reports about the alteration of balance sheets on Wall Street in 2009? That did have a global effect," said Lorenzino after learning of ultimatum of February 1. "If they care about relevant statistics, where is the penalty for England over the manipulation of the Libor (the interbank rate London market)? That affects everyone," he added. Something has changed. The new roadmap should now in theory contain the new national CPI announcement in the next few days and thus definitively bury this source of conflict.
In parallel, the reopening of the swap marches forward (the law passed by Congress still must be promulgated) and the understanding with companies that have favorable rulings before the ICSID and the Uncitral. This last chapter could be announced in the short term, perhaps before Cristina Kirchner’s trip to the United Nations this Saturday. This requires a DNU at the hands of a resolution from the Economy Ministry, specifying the sentences, the payment in bonds, the haircut and the commitment to reinvest a percentage of what the companies will collect back into the country. Here, this measure aims to seduce another spectator, the United States government, into supporting the country in the lawsuit that the vulture funds are about to definitively win in American court. It is obvious that the decision of the U.S. Supreme Court on this lawsuit is independent and beyond pressure from the Obama administration. But American support is key for the highest court to at least accept taking up the Argentine case. Again, time is the key: If the Court takes the case, the government will have stretched out by another year, almost to2015, the final ruling of the lawsuit.
And there are collateral benefits, which perhaps were not the engines of the shift which occurred in the last 30 days, but which played their role. The current and projected shortage of foreign currency in the economy, to revive large expenditures in dollars from agencies like the World Bank following an agreement within the framework of the ICSID, would be a blessing. Remember that the U.S. government has been voting against the country in the board of the entity. After the shift, it has to get that vote to shift.
El Cronista
The IMF decides at the end of the month on a ‘pardon’ for Argentina over INDEC statistics
The economic team visited the Fund for the new CPI. It seeks to avoid the entity’s board deepening sanctions for the country over its questioned statistics
Wednesday, September 18, 2013
The International Monetary Fund (IMF) yesterday confirmed that it held discussions with the economic team headed by the head of the Palacio de Hacienda, Hernán Lorenzino, to analyze the implementation of the new consumer price index at the national level in Argentina.
Meetings were held in Washington and point toward demonstrating to the agency, led by Christine Lagarde, progress in the preparation of statistical indices that meet international standards, especially since the motion of censure that the country suffered over the questioned CPI and GDP growth numbers.
"Officials of the Fund and the members of the economic team of Argentina held discussions within the framework of the ongoing dialogue between the IMF and Argentine authorities on the establishment of a new price index," said the organization in a statement.
The IMF is maintaining a motion of censure against Argentina over the delay in the updating of INDEC’s methodology for measuring inflation.
Argentina pledged to put in place a new indicator during the last quarter of this year.
The multilateral body that Christine Lagarde leads noted, moreover, that it hopes "to continue this dialogue with Argentine authorities to agree on the final preparation of the new indicator."
Lorenzino and a delegation from INDEC took the trip to Washington to explain to the Monetary Fund how the new inflation measure would work.
The Argentine delegation was made up, in addition, of the director for Argentina before the IMF, Sergio Chodos; the Director of INDEC, Ana María Edwin; and the technical director of the official agency, Norberto Itzcovic, who held parallel meetings with experts from the Fund.
On Friday 27th, the IMF's Executive Board will discuss the progress made by Argentina in the creation of the new indicator, prior to the Board meeting in which the so-called 'Argentine case' will be taken up on November 13.
The director of the Department for the Western Hemisphere of the IMF, Alejandro Werner Wainfeld, who took office in late February, is the one who will have to evaluate Argentina’s presentation on the new indicator before the Board.
The new national CPI, as anticipated by the government, will be launched between October and December of this year.
In Washington, Lorenzino also met with the team of lawyers from Cleary Gottlieb Steen & Hamilton study, the law firm defending the country in the case against the vulture funds.
Lorenzino also met with executives from the World Bank to move forward on appropriations that Argentina has pending in that body, and the resolution of agreements with companies that sued the country before the ICSID, the tribunal of the body that arbitrates economic differences between countries and companies.
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