Lead Articles:
Infobae: “Holdouts do not plan a negotiation for the debt and want to exhaust the country in the courts”
La Nacion: “The change of place of payment on bonds is conditions on the response from the U.S. Supreme Court”
Clarin: “Debt reduction, yet another tale”
Perfil: “Lavagna: “Executives from abroad cannot be treated like provincial mayors”
OTHER NEWS ITEMS:
· Perfil reports that Guillermo Moreno has “resumed his schedule” after two weeks of holding no meetings or making any public appearances, and after he spread rumors of his possible resignation only to get a public reaffirmation from Cristina.
· Clarin reports that only days after the ratification of the YPF-Chevron contract for Vaca Muerta, Argentina signed on to a UNASUR resolution that backs the government of Rafael Correa against an “international campaign of defamation against Ecuador” allegedly being financed by Chevron.
· In an interview with La Nacion, Banco Macro owner Jorge Brito, seen widely as a Kirchnerist, said he supports many of Cristina’s latest announcements and says he is not concerned about the level of the BCRA’s reserves. He said that the reopening of the swap came about because “there isn’t another alternative to be done” although it should have been done sooner. His one critical line is that he feels Cristina “is not listening to the voice of the people” enough, and her government’s problem is with marketing its policies better.
· La Nacion reports that UBA has agreed to postpone the awarding of a chair in Economics to Axel Kicillof for one year as he remains in government, tamping down rumors of a departure. An unnamed Economy Ministry official comments: “Axel is a Kiciloffista; the getting close to La Campora adds to his internal image, but he is only out for himself.” The piece notes that before he entered government he founded a think tank that was critical of the government’s manipulation of INDEC.
· La Nacion reports that more and more luxury brand stores are abandoning Avenida Alvear in Buenos Aires due to import and currency restrictions, and spiraling rents, with nearly all of the international brands having departed already.
· Daniel Scioli has gotten 10 Peronist governors to agree to re-formulate the National Council of the Partido Justicialista (the formal Peronist political party) an rebuild the party’s strength for the 2015 elections. The move is seen as a coup for Scioli’s presidential ambitions.
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Infobae
Holdouts do not plan a negotiation for the debt and want to exhaust the country in the courts
Sources for the creditors told InfoBAE that the canceled hearing in the office of Thomas Griesa “has nothing to do with negotiations to reach an agreement with the country.” In the market, they are dismissing that it could have been an outreach. The funds will seek to isolate the country even more.
Saturday, August 31, 2013
By Leandro Gabin
"It was a procedural hearing. It has nothing to do with negotiations to reach an agreement like it has been said,” said an important source for the holdouts to InfoBAE around what happened with the canceled hearing in the courtroom of Thomas Griesa between the creditors and the Argentine government that never happened on Thursday. So you were not seeking an agreement with the government, this publication asked a second time. “The creditors have been seeking an agreement for a decade,” was the brief response received.
So, with a level of total secrecy, the matter has been handled in recent hours, a fact that shook up both friends and strangers. According to different sources in New York, the meeting between Griesa, the vulture funds and the Argentine government was a closed door meeting (many times public for other interested parties, bankers and others) and without having been publicized. The outcome is known: it was cancelled.
"The parties want to chat among themselves,” was the response given by a clerk to Judge Thomas Griesa when more than one banker asked about what had happened to have it be canceled. From the Economy Ministry it has said that the hearing had been requested and brought up by the funds, something that according to what sources in New York say was not completely correct. Beyond this, nor does it explain why or for what the private hearing in Manhattan was for.
Either way, due to the total secrecy several hypotheses began to emerge. One, which was denied by the creditors to this media outlet, spoke of intentions to "negotiate" some kind of agreement with Argentina. While it is true that the holdouts always asked to negotiate with the country in the past, of course on its terms and not recognizing the level of haircuts as the others, it is highly unlikely that the parties (at this judicial instance even less) can agree on anything.
The lawyer for the funds is a former solicitor general who has close ties to the Supreme Court
This week it even came out in a report on the CNBC network from Ted Olson, of the law firm of Gibson, Dunn & Crutcher, and legal representative of the NML Fund of multimillionaire Paul Singer. In that interview, when he was asked about the possibility of negotiating something with Argentina, the lawyer said: "My clients have always been willing to talk about it. But Argentina said from the beginning that would not give a single penny to these legitimate bondholders who have judgments in U.S. courts and under American laws. Therefore, it’s Argentina that has been recalcitrant, stubborn and has refused to negotiate. If it changes its tone, then we will see what happens", he said.
The window that Olson left open is, in the best of cases, strategic by saying that the will to negotiate is always there. In fact, with a cascade of errors in their favor, the holdouts will not take the haircut proposed by the government, nor will this government pay anything more to this class of investors. A conversation of deaf people with a predictable end.
"I do not think that negotiations are possible. That time has already expired. In addition, they (the holdouts) are very comfortable handling the timing of this case," said a banker from New York who closely follows the case, in a dialogue with this publication.
"Nor can Argentina offer something that gets closer to the position of the creditors. It is not feasible politically, beyond the numbers. And nor can they settle this issue 'under the table'. That was for the beginning of this trial, now all the cards are on the table", he said.
According to those from Wall Street, the strategy of the vulture funds would be one of exhaustion. They know now the only thing missing is the Supreme Court being on their side, since lower courts already bought their arguments. It is no coincidence that Paul Singer’s lawyer is Olsen, a former Solicitor General of the United States between 2001 and 2004 named by George W. Bush. It is said he is an acquaintance of the members of the U.S. Supreme Court.
It is believed that the hearing in Griesa’s office will take place, although there is no news yet about the timing. In the Economy Ministry, when asked by this publication, they said they "have nothing new” about a new hearing.
The reasons are not clear. Can creditors ask to lift the stay on the ruling and make it effective because the government is proposing a bond swap in Buenos Aires? Some lawyers believe that this would be the argument, although the current "stay" or suspended sentence is in another court, in the Court of Appeals. Of course, the natural judge in the case is Griesa, so these private hearings end up in his office.
By now, everybody expects the other to make the next move of the chess piece, while speculations remain as well as strategies to lift a sentence that comes with a clear favorite.
La Nacion
The change of place of payment on bonds is conditions on the response from the U.S. Supreme Court
The government doesn’t plan on launching it so as to not be accused of being in contempt, but will us it to show good will while the ruling is stayed
Saturday, August 31, 2013
by Florencia Donovan and Martín Kanenguiser | LA NACION
The market was confused. President Cristina Kirchner announced over a national broadcast the reopening of the debt swap and the possibility of changing the jurisdiction of the bonds with foreign law by Identical bonds with national law, but then did not seem to go much further on the details. According to what official sources confided to LA NACION, the idea of the government would not move forward, especially with the change of jurisdiction of the bonds, until the Supreme Court of the United States responds regarding the Argentine case.
The Argentina would thus avoid having the bondholders who are litigating in international courts accuse the country of disobeying the American judiciary which, specifically, warned Argentine government last year to not try to circumvent the ruling by modifying the conditions of issuance for the bonds. "The only concrete thing is the legislative procedure to suspend lock law; we did not give details about the date of the swap nor the change of place of payment", a qualified official source indicated.
The first thing that the NML fund, of Paul Singer, did days after the announcement by the President was to cite in a legal brief the imminent change of jurisdiction of the bonds as a signal that the Argentine government had plans to evade the ruling. With the same argument, other funds also asked New York Judge Thomas Griesa for a hearing last Thursday, which, however, was suspended at the last minute "for procedural reasons", according to sources from the case.
For the government, the mere act of putting the offer of the change of jurisdiction on the table would serve to demonstrate to the market their willingness to pay.
The lawyers know, however, that there is no risk now from the holdouts attaching future payments that Argentina makes during the stay of execution of the sentence from Griesa.
Legal experts believe, however, that the stay could be extended at least until the first quarter of 2014.
The government has 90 days from Friday the 27th, when the ruling of the Court of Appeals came out, to appear before the Supreme Court, and only then will the highest court of the United States decide if it takes the Argentine case or not.
Ultimately, if the Supreme Court should refuse to take the case and, at the same time, lift the stay hanging over the enforcement of the ruling against the country, Argentina has already showed to creditors that they have the chance, voluntarily, to ask for the change of jurisdiction of their bonds, to begin collecting in the country, and avoid the risk of attachment.
Last Wednesday, in his presentation before the Senate, the Economy Minister Hernán Lorenzino, was very careful not to mention the change of jurisdiction of bonds as a swap, nor give too many details. "This should not be interpreted in any way as a unilateral decision to alter any payment mechanism", said the minister, according to the stenographic transcript of the meeting. "We see it as a voluntary and possible option for creditors who find it more convenient to renounce the rights that American law provides and accept, in the same terms for the State, other legislation", he said.
On the 30th of next month, the government will have to pay US$164 million to holders of the Par bonds, and then December 2 has a maturity of the Global 17 Global , and 30th of the same month there is a coupon for the Discount bonds. "I think that the message that we have to give, to the courts, in particular to the Argentines and to the 93% who entered the swap, is that the Argentina has the capacity and the will to meet those obligations", Lorenzino told the senators.
Yesterday, on the stock market Argentine bonds returned to record mixed closures, a sign of the uncertainty that the Argentine strategy continues to generate, and the uncertainty about of what will be the reaction of American courts. The Par bond in dollars with foreign legislation yesterday climbed 0.67%, while that of Argentine law rose 2.14%. Meanwhile, the Discount in dollars with Argentine law fell 0.61%, and the same bond, but issued in 2010, rose 1.23%.
Next Wednesday, the Senate has scheduled a floor debate on the bill submitted by the government to suspend the lock law and thus be able to reopen the debt swap. It is believed that in 15 days it could also have the backing of the lower House. According to an estimate from the bank Credit Suisse, if the government offered a swap to the holdouts under the same conditions as in 2010, as the economic team has said, the offer of new Discounts would be valued at about 50 cents on the dollar and 48.3 to the euro , respectively.
Clarin
Debt reduction, yet another tale
Saturday, August 31, 2013
by Jorge Lanata
In 2001, when Argentina went into default, the public debt was US$144.212 billion. After the 2005 debt swap it dropped to US$129.227 billion. Today it’s more than US$240.000 billion. If it’s true that governments are defined by the legacy they leave behind, it would be worth asking what happened to debt reduction.
On December 15, 2005, Néstor Kirchner announced at a ceremony in the Salón Blanco of the Casa Rosada the advance payment of the debt with the IMF. "We are, with this payment, burying a large part of an ominous past, one of infinite debt and eternal austerity," he said back then.
On January 26, 2010, in the Municipal Park of Villa Albertina, in Lomas de Zamora, Cristina said: "They want the debt swap to fail so we will go back into taking debt with a double-digit rate, they want to knock us down and impose a policy of hunger on us."
On April 16 of the same year, the President told the Bloomberg new agency about the swap: "This is a second chance, and they have to not miss out on it because the same train won’t leave the station a third time".
But while on July 9 of this year, in Tucuman, she still insisted there was debt reduction, the train again departed on August 26: Cristina defined her tenure as a government of "serial payers", and announced the third reopening of the debt swap for the 7% of creditors who did not enter in previous agreements.
Her last speech had an apocalyptic tone: she announced three measures. The first one was to ask God to illuminate the American Supreme Court. Debt restructuring specialists agree that the government is arriving late: if it pays the US$1.33 billion to the vulture funds (0.45% of the creditors remaining) in short time it will have to face paying the other 7% other, to which would be added some 20 billion, when the country's reserves are below US$37 billion. The other measure announced by Cristina, after the prayer, to move the payments to Buenos Aires to avoid attachment, further increased the lack of confidence abroad: is like going to a match and when the results start to become adverse, taking the ball and leaving. "The President left no doubt about the solitary reason for this plan: to evade the jurisdiction of the courts of the United States", Paul Singer, representative of the holdouts to the Supreme Court (sic), alleged. The Argentine attitude had gone from words to deeds: "Not a penny to vultures", Cristina had said on October 26, 2012. "We will never pay the vultures," Lorenzino confirmed four days later. "There are sectors that are not banking on the success of debt reduction."
The story was gridlocked: If you pay, the debt multiplies with the remaining holdouts, and if you don't pay, the country enters into a default; either of the two solutions is a new problem.
"The latest official data,” summarizes Ismael Bermudez, “from December 31 speaks of US$197.464 billion in public debt. But that calculation from the Economy Ministry does not include debt that entered the exchange - with 7% of the bondholders - plus interest (estimated to be close to $ 20 billion), what is left to pay on the GDP coupon ($18 billion), plus interest on the debt with the Paris Club which has not been paid since 2001, about 5 billion. The public debt today exceeds US$240 billion, representing more than 50% of the GDP calculated to official dollar rate."
As all of this is mathematics and two plus two can equal five, Cristina said in her last speech that we have it only at 10% of GDP.
The government which has prided himself on having substantial debt reduction now presents itself as payer serial, but neither is true: Argentina paid debt but didn’t do it with its own dollars, which it lacked, but it borrowed dollars from the Central Bank. "The Monetary Fund was paid but it ended up owing the Central Bank approximately US$68 billion,” Bermudez continues, “therefore, the debt did not decrease, but it changed its creditor." It also went into debt with ANSeS, which absorbed the bonds that were in the hands of the AFJPs with the nationalization of the system, and with Banco Nacion, totaling more than 32 billion dollars in debt. "
A fanatic of creative accounting, the government does not count as debt that which came from other state organizations. Does that mean that it will never pay it? Dollars from the Central Bank back the pesos that we have in our pockets: the currency clamp is the most concrete consequence of that affirmation. Did I say that governments are defined by what they leave behind? I would like to end by repeating that.
Investigation: JL / María Eugenia Duffard / Amelia Cole
Perfil
Lavagna: “Executives from abroad cannot be treated like provincial mayors
The negotiator of the debt together with Kirchner says that the country has no credibility and puts the success of the swap announced by CFK into doubt
Saturday, August 31, 2013
by Hugo Passarello Luna from Paris, France
Former Economy Minister Roberto Lavagna, architect of the first debt restructuring during the government of Néstor Kirchner, spoke with PERFIL about the recent reopening of the swap announced by the government after the ruling from a court in New York in favor of so-called vulture funds.
-Could the reopening of the exchange be successful?
-You have to see this as one of the flaws that Argentina has in matters of continuity in state policies. When we did the restructuring we left a path open that would go until 2014. The government followed virtually none of it. The "mini-swap" of 2010 was put together by a consultant. It was not put together by the government. That swap was not a good negotiation. Now, it is possible that some creditors are simply waiting until 2014. Ten years ago it was envisaged having the possibility of more flexibility if there was still something to settle. There is never 100% acceptance. Back then it was anticipated that after 10 years, specific agreements with some creditors could be made.
-Do you think that creditors who already entered into swaps will be seduced to change legislation to avoid attachments?
-I don't have all the details of the exchange. But it seems a little funny that there is a great move to convert securities which are under international law to those with Argentine legislation. In a country that has control on currency, and a very unclear one that depends a lot on the whims and arbitrariness of an official. I don't know if there will be some detail in what the President presented that can save this, but seems difficult to me because there is a problem of confidence. It’s a problem of credibility. The government lacks all credibility abroad, because it doesn’t comply with what it has promised. It is not free to have formally promised, by the own President of the Nation, that it was going to settle with official creditors in the Paris Club and then not do anything. A government or businessman from abroad cannot be treated as if they were a mayor from Greater Buenos Aires, where you give them cash if they get more votes.
-Part of the government believes that the GDP coupon, whereby creditors collect extra if the economy grows, was an error of your leadership because today is a burden on the public coffers. What is your response to them?
-To them I would ask something back: so why did you issued them in 2010 then? Instead of repurchasing them as was planned, they issued additional bonds. When it suits them, they say that the restructuring of the debt was negotiated by Néstor Kirchner. That it reach an agreement. They lack coherence in practically everything that they do. They believe that the narrative can cover over reality.
-Is Argentina’s litigation a weight to carry on the back of the next government?
-I do not put the entire question on the issue of the holdouts. Suddenly it seems that this is the country’s main problem. Argentina has other, much more important problems. A very serious problem of employment, low investment, and high inflation, for example. These are the reasons why the government lost those votes in a year and half, it was not on the debt issue. In a week’s time, this is old news. The employment problem is never old news because it is serious. The weight on the next government’s back is something else. For example, the energy “bill” is in the order of US$13 billion that is not possible to settle with any manipulation in a courtroom. The energy weight being carried on our backs has to be paid every month.
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