Lead Articles:
Clarin: “The vulture funds believe that the country will try to return to the markets”
El Cronista: “Estimates that Argentina could delay the judicial fight with the holdouts until 2015”
Ambito Financiero: “Efforts in the U.S. over ICSID and Fund confirmed”
La Nacion: “Lorenzino in the U.S. tries to smooth out IMF criticism over inflation’
Clarin: “Lorenzino travels to the U.S. to discuss a new price index with the IMF”
Clarin: “Swap: the enormous costs of an irresponsible strategy”
OTHER NEWS ITEMS:
· El Cronista reports that with the expiration of the terms of three members of the Board of Directors of the BCRA, Axel Kicillof will have the chance to put forth two of the replacements.
· El Cronista ran the Financial Times article, “Risk of default adds to woes for Argentina’s Fernandez”, by Benedict Mander, from yesterday’s edition in London (http://www.ft.com/intl/cms/s/0/7c19bfec-1ae1-11e3-a605-00144feab7de.html?siteedition=intl#axzz2f9CLuXA0) in Spanish this morning in Buenos Aires: http://m.cronista.com/economiapolitica/El-riesgo-de-default-se-suma-a-las-preocupaciones-de-Cristina-Fernandez-20130917-0065.html
· Clarin notes that Cristina will travel to the UN General Assembly meeting in New York next week with a pact with Iran over the AMIA bombing that is “paralyzed.” The accord “cannot be executed until the foreign ministers send or have sent mutually notifying each other that the MOU was ratified by both countries.” Iran’s government hasn’t done so, an there is a constitutional challenge to the document in the Argentine courts in progress.
TRENDING TOPICS/ARGENTINA on Twitter:
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Clarin
The vulture funds believe that the country will try to return to the markets
Tuesday, September 17, 2013
At a conference that took place yesterday at the EMTA (Emerging Markets Trade Association), in New York, lawyers involved in the case of the vulture funds agreed that neither a payment of the rulings that five companies obtained in their favor in the ICSID, nor the negotiations with the IMF to resolve the problem of INDEC, will have influence when the U.S. Supreme Court decides whether or not to accept the appeals from Argentina.
The attorney for NML, Roger Cohen, told Clarin that the change in conduct by the government may indicate, however, that Argentina "needs to go back to the market" and if so it increases "the chances of a negotiation with us.”
According to Antonia Stolper, of Shearman & Sterling, experience has shown that countries sit down to negotiate with holdouts only if they need to return to the markets.
While among the panelists great caution prevailed with regard to the supposed change in government, all agreed that it will not affect anything around the decision by the Supreme Court over whether it will accept the Argentine appeal or not.
In response to a question from Clarín, Steve Froot said that the only thing that interests the Supreme Court is what the law says. According to Cohen from NML, Argentina will stress its change of conduct in the second appeal that will make to the Supreme Court. But "I don't think that the negotiations with other creditors is going to influence the judges," he said.
Marco Schnabl, representing Puente Hermanos, agreed: "They’ll include it in the second appeal. But it is only marginal." He then added that the Court of Appeals is only interested in whether the ruling violated the Foreign Sovereign Immunity Act or not. Schnabl - who aspires to be Argentina’s lawyer if the government decides not to abide by the decisions of the U.S. courts – was in line with the Casa Rosada when he harshly criticized the Argentine media that, according to him, tells "Chinese stories" when speaking of the vulture funds: "I would not take them as a source", he said with scorn. In fact, if Argentina enters in contempt of court, the government will have to change lawyers and a source confirmed that Schnabl is interested.
Richard Samp of the Washington Legal Foundation, an expert on the Supreme Court, said that, since there will be a second appeal, the case could go on until February 2015. The panelists agreed in saying that the Supreme Court will reject Argentina’s first appeal or keep it suspended, and is very unlikely to accept the second appeal.
El Cronista
Estimates that Argentina could delay the judicial fight with the holdouts until 2015
Legal experts believe that the Supreme Court will not act on September 30 and will await Argentina’s filing of an appeal that it has pending
Tuesday, September 17, 2013
by MARÍA ELENA CANDIA Buenos Aires
A panel of legal experts agreed yesterday that the U.S. Supreme Court will not evaluate on September 30 whether to grant a review or not to the case of Argentina against the holdouts, that refers to the appeal of the ruling of October 26 of last year, by which the Court of Appeals of New York upheld the sentence of the Judge Thomas Griesa that ordered the country to pay its creditors.
On the other hand, it is expected that the Supreme Court will act once the Argentina appeals the ruling that the Court of Appeals upheld on 23 August, which ratified the amounts and payment mechanisms, which still has not been incorporated into the process of the highest court.
This decision would give more time to the Argentine defense in the holdouts saga: in the worst case scenario, the final ruling will happen sometime in 2014, although they don’t rule out the possibility of procedural steps lasting until mid-2015.
The conclusions emerged from a seminar carried out yesterday in New York, which was sponsored by Puente Hermanos, in which six legal experts spoke and analyzed the decision of the Appeals court about the case of the NML Capital and Aurelius Capital against Argentina and the subsequent appeal by the country to the U.S. Supreme Court.
One of the members of the panel was Robert Cohen, the lawyer for NML, who argued before an audience that included the Argentine media, that the holdouts still reserve the possibility of asking the Court of Appeals to lift the stay - which prevents the country from falling into technical default - in case that some event takes place indicating that Argentina is going to evade the decision of American courts. With this statement, Cohen cleared up any doubts that many speculated about around a possible lifting of the stay from the statements by President Kirchner in relation to the change of jurisdiction of the bonds with New York law to local law.
"I think that on the panel, all the speakers agreed that Judge Griesa’s order which he issued on March 5 remains in effect," said Bruce Wolfson, a lawyer study Bingham McCutchen, in statements to El Cronista, who served as moderator of the meeting.
The court order of March 5, 2012 prohibits Argentina from carrying out actions to evade, rescind or prevent the execution of the order of the Court, including the alteration or modification of the process or application of certain transfer mechanisms whereby payments on bonds are made without prior approval of the Court.
In a dialogue with El Cronista, lawyer Marco Schnabl, one of the speakers at the meeting, argued that if the Argentine defense aims to use all available resources to extend the procedural deadlines, probably nobody will hear any statement from Argentina that might put the stay at risk.
Another issue that the panelists, whose opinions were divided, commented on is whether the Supreme Court would ask the Solicitor General to issue an opinion in the Argentine case, which would contribute to delaying the procedural deadlines even more in favor of the country. In the opinion of Schnabl, it would be "very unusual" if that happens, while Richard Samp, director of the Washington Legal Foundation, who participated in the meeting, gives it a 20% chance of happening.
Ambito Financiero
Efforts in the U.S. over ICSID and Fund confirmed
Tuesday, September 17, 2013
The government is seeking to close a deal with companies that sued Argentina before the tribunal for dispute resolution at the World Bank, ICSID, and is analyzing with its lawyers the lawsuit with the vulture funds and is seeking to avoid a warning from the IMF under the promise of issuing a new, more credible price index before year's end. Economy Minister Hernán Lorenzino and Finance Secretary Adrián Cosentino are in the United States, holding negotiations since last Friday and today they will return to the country. The Palacio de Hacienda confirmed just yesterday, three days later, the efforts by the officials, while the travel and the secret information, as well as the agenda that they followed in Washington, had not been officially communicated.
The Palacio de Hacienda reported yesterday that Lorenzino met with officials from the World Bank to discuss issues on the agenda and with IMF officials to address the issue of the new consumer price index. It was reported that the Minister, together with Cosentino, met with the law firm that is in charge of the Argentina defense in the lawsuit against the vulture funds in U.S. courts.
According to what came out, the government is preparing to sign an agreement with five companies that filed lawsuits against the country in the ICSID, the tribunal of the World Bank, which arbitrates economic differences between countries and companies. The agreements, as this newspaper reported yesterday, will be made with Azurix, the ex-concessionary for the service of drinking water and sewers in the province of Buenos Aires; with Blue Ridge, who was in charge of CMS Gas Transmission Company; and Vivendi, for Aguas del Aconquija in Tucuman. The other two companies are Britain's National Grid, which was part of Transener, the conveyor of electric power, and Continental Casualty Company, shareholder of CNA Occupational Hazard Insurance that held Argentine Treasury Letters in pesos convertible to the dollar.
The agreements would include a haircut in principal and interest, payment in bonds and a commitment to reinvest in the country a percentage of the debt to be paid, and that in total would reach 500 million dollars for the five companies. The majority of the suits originated after the crisis of 2001 and the fall of convertibility, a time in which the companies abandoned the services and demanded financial compensation. The government would achieve a reduction of 15% on the original capital and 45% by the interest generated from the final ruling. Economy officials also negotiated in Washington that the IMF not issue a warning to Argentina, as the deadline will pass at the end of this month which INDEC agreed to with the international organization to put into effect a new system of measurement of prices.
The government will announce to IMF officials that before the end of the year it will reveal the new indicator of prices and would ask the IMF's Executive Board to lift a sanction over the lack of credibility of measurement of inflation and economic growth. The IMF's Executive Board must meet in November to consider the compliance of the INDEC. Last April, the IMF warned Argentina that it could apply sanctions over the delay in the implementation of the indicator that has been analyzed by technical staff from the organization since February 2012. INDEC has already been making field measurements throughout the country for the new price index, in order to put it into operation before the end of the year.
La Nacion
Lorenzino in the U.S. tries to smooth out IMF criticism over inflation
The minister held meetings with officials from the entity, which will discuss on the 29th a strong report about official statistics; he also met with attorneys defending the country
Tuesday, September 17, 2013
by Silvia Pisani and Martín Kanenguiser | LA NACION
In order to mitigate several simultaneous storm fronts, Economy Minister Hernán Lorenzino, traveled to Washington over the weekend to hold a series of meetings about the new consumer price index (IPC) and to closely follow the case with the holdouts.
Sources from the Palacio de Hacienda told LA NACION that the Minister held meetings yesterday with authorities of the International Monetary Fund (IMF) accompanied by Finance Secretary Adrián Cosentino. The IMF received the news last week of this surprise visit, which Norberto Itzcovich, technical director of the questioned INDEC, and four other Argentine officials also participated in. It was expected that Ana Edwin, the head of the Agency, would travel but she allegedly cancelled for health reasons.
The IMF did not comment on these meetings, although it came out in Washington that some agency officials interpreted this mission as "pressure".
On the 29th of this month, the staff of the Fund will bring a report to the Board about the situation of the questioned figures from INDEC on inflation and growth, by which the intention of the Minister was to show in a personal way the alleged progress made on the new national price index. "There are a series of meetings today and tomorrow on several issues, among them with the IMF; there are also meetings with the law firm representing the country” in the case in New York, said the official source, without providing more details. Tonight, officials will return to Buenos Aires after meeting with the staff lead by the director of the Department of the Western Hemisphere for the Fund, Alejandro Werner, an Argentine-Mexican.
The official intention is to soften the tough report of the IMF technical staff - which could give rise to other sanctions on the country before the end of the year by the Board of the Fund - with the promise that the new national CPI will be ready soon, replacing the metropolitan IPC, which has been manipulated since early 2007.
The Minister also traveled to meet with lawyers from Cleary, Gottlieb, Steen & Hamilton, who are representing the country, to discuss the situation of the court case that Argentina has lost in two instances with a group of vulture funds and Argentine retail investors, and which will be formally received by the Supreme Court of the United States on the 30th of this month. The receiving of the case on that date, according to lawyers who follow the case closely, does not mean the High Court will decide instantly on the fate of the case, since it is likely that at some point in the year it will request the opinion of the solicitor general of the government of Barack Obama about the desirability of studying the ruling that orders Argentina to pay them the holdouts US$1.5 billion.
At least yesterday there was no contact with the U.S. Treasury on these issues. It was not confirmed if there were meetings with investors to sound them out over for the new swap to exit the default.
The Democratic government will not give an opinion before the Supreme Court requests one, qualified sources told LA NACION.
On the possibility of a deal being closed in the short term with a group of American companies that sued and won cases against the government before the ICSID (arbitral tribunal of the World Bank), as the newspaper Ambito Financiero reported yesterday, official sources would not comment. The idea of offering them bonds on the same terms as the bondholders who will participate in the new debt swap came out more than a year and a half ago, but until now it has not been sealed.
If this conflict is settled with the companies Blue Ridge and Azurix, there would be greater hope of the United States reversing its position on voting against new loans for Argentina at the World Bank, for some US$4 billion, which is key in this context of continuous capital flight.
To access these funds, Argentina will also have to turn around the refusals of several European governments who are angry – like the United States- over informal trade barriers and the lack of progress in the negotiation with the Paris Club, which has accumulated a US$9 billion default. The government let it be known that it wants to receive investments for the same amount that it owes this group of countries.
The Court will only resolve the case in March
NEW YORK.- Argentina has scarce prospects of settling its legal fight with Paul Singer, owner of the vulture funds Elliot Management and NML Capital, in the Supreme Court of the United States, although the 'no' of the high court could end up coming only towards the end of next year. So concluded six lawyers convened by the Emerging Markets Trade Association (EMTA) for a seminar on the Argentine case, in which they estimated that the Court will reject or leave pending the petition which Argentina already brought for it to hear the case, on September 30.
The Court will choose to wait for a second petition from the lawyers of the country, which will come after the Court of Appeals of New York rejects the request for an "en banc" hearing. Once that request is made, the final decision of the Supreme Court could come in March of next year or stretching out towards to the northern autumn of 2014.
Clarin
Lorenzino travels to the U.S. to discuss a new price index with the IMF
He also held meetings at the World Bank over barriers to credits
Tuesday, September 17, 2013
Economy Minister Hernán Lorenzino, led a lightning round effort in the United States to meet with officials of the International Monetary Fund (IMF) and the World Bank. The objective was to advance the negotiations with the Fund about the creation of the new national consumer price index because the government has until September 29 to present results.
The Minister traveled Friday to Washington and will be back in Buenos Aires today. Finance Secretary Adrián Cosentino, and authorities of the INDEC, Norberto Itzcovich and Ana Edwin, accompanied him.
Lorenzino was not seen with the head of the IMF, Christine Lagarde, who was held in a "working retreat" with the directors. But the Argentine representative to the Fund, Sergio Chodos, could not participate in this meeting because he had to accompany the Minister at meetings with teams from the Department of Statistics of the organization. The IMF's Executive Board plans to address the issue of Argentina before November 13 and already called upon the government to reform its statistics before September 29.
The Economy Ministry has moved up the preparation of the national CPI, and is even not ruling out that that it could issue the September inflation data before the legislative elections in October. In every way, this data would not be comparable with the current Capital-GBA CPI which is taken today as a reference, as it would have a different composition and cover a different geographical and consumer universe.
"There were meetings with the World Bank on issues from the agenda and with the International Monetary Fund on the new CPI, which is moving forward,” Minister Lorenzino’s spokeswoman reported yesterday.
On effort before the World Bank, there were no details, but it has come out in recent months that the government has concerns because the flow of credits with this organism has been negative: Argentina is paying it more than is being lent. This is the consequence of an implicit "punishment" of Argentina - there is no renewal of loans and only what is already approved is being disbursed- of the lack of agreement with the holdouts, the Paris Club and the trade disputes tribunal (better known by the acronym ICSID). Yesterday, the government denied rumors that the government is about to close a deal with five companies that have already received definitive sentences in this tribunal.
Lorenzino met with lawyers representing the Argentina in the United States in the lawsuit being carried out with the so-called vulture funds over unpaid debt.
Clarin
Swap: the enormous costs of an irresponsible strategy
Tuesday, September 17, 2013
by Ricardo Gil Lavedra, National Deputy (UCR)
After an arduous debate, the House of Deputies approved the reopening of the debt swap. This decision will have consequences for Argentina, not only in relation to those who still reject the swap (holdouts) but in its ties with the world.
The management of the public debt is a national matter, not a matter of one government. Because, beyond this lawsuit with the "vulture funds", what is at stake is Argentina’s reputation and the possibility of falling back into default.
Therefore, it is right to analyze what was done wrong and how we came to this delicate situation, irrespective of epic narratives, defective information and wishful thinking. Carried out in 2005, the debt restructuring was not the panacea that officialdom calls it. First of all, due to the overestimation of GDP, Argentina has had to pay a lot more than it should corresponding to bonds tied to the gross product. Secondly, countries such as Russia, Ecuador and Ivory Coast have obtained acceptance percentages much higher than Argentina’s 93%, and in one single round of an exchange.
There is also no doubt that the strategy deployed by the Executive during the judicial proceedings in the United States has been irresponsible, even reckless. Instead of showing willingness to pay on equal terms with bondholders who agreed to the swap and with respect to the jurisdiction to which Argentina had submitted voluntarily, the unpaid debt was repudiated and the foreign judges were challenged with contempt of court.
Before the succession of adverse rulings were issued by American judges, Argentina squandered numerous opportunities to offer to pay what it is now offering. While the judges were deciding what to do about the petition of the vulture funds, the government, from the mouth of the President, said that it didn’t matter where the order came from, the Argentina wasn't going to pay "a single dollar". In this context of repeated strategic mistakes, opening this new debt swap seems to be too little, too late. However, it is the institutional gesture that the situation demands, and was required since that long-ago ruling of December 2011, because it shows the willingness of the country to honor its obligations.
The official narrative is always based on a fiction, in a fanciful construction in which the government is facing off with some force of evil. The facts are not changed by an epic illusion. The government is now making this gesture to reopen the swap, pressured by events which long ago escaped their control, because the narrative, once again, has crashed into reality.
We are depending at this moment on a discretionary decision of the U.S. Supreme Court to accept consideration of the Argentine case. If this does not happen, there will be very serious financial and economic implications for the country. We have been led into this situation not only the vulture funds, but by the reckless irresponsibility of a government that believes that everything is resolved with bullying rhetoric.
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