Lead Articles:
Ambito Financiero: “The swap is now open for the third time”
El Cronista: “The Congress left open the debt swap and annuls the effects of the Lock Law”
La Nacion: “U.S. Court analyzes from the 30th if it takes up the default”
El Cronista: “Holdouts: the U.S. Court set a date an Argentina bets on gaining another year”
El Cronista: “The emergency landing of La Campora”
Ambito Financiero
The swap is now open for the third time
Thursday, September 12, 2013
The House of Deputies last night, with 192 votes in favor and 33 against, turned the bill into law on the second reopening of the swap launched in 2005 that the government wants to use to give a signal of willingness to pay to the U.S. Supreme Court of the United States that, according to what it announced, will discuss on September 30 if it agrees to analyze Argentina’s appeal of the New York appellate ruling.
It was not a session at risk for Kirchnerism, since the opposition supported the bill on the final vote. But there was a bitter debate about the strategy that the government has carried out in the past two years on the debt held by bondholders who did not enter the swap.
"It is a national cause which much find us united beyond partisan differences. This bill is one more step in a long ongoing process, consistent and with principles aimed at normalizing the debt instrumented with public bonds that were subject to cessation of payments in the year 2001,” said Carlos Heller yesterday as a reporting member for the pro-government block. "A handful of speculators may not go against the will of all our people," he said about the vulture funds, following the official songbook on the subject.
Roberto Feletti, as Chairman of the Committee on Budget and Finance, began on the floor by "thanking the opposition blocks that have joined this discussion on the restructuring of debt as state policy.”
He then attacked the judicial moves by the holdouts to collect: "Less than 1% of the creditors" can turn a successful restructuring on its head with a single action. "It is not sustainable from the legal, economic or of the solvency point of view for the international financial system," he said on the floor.
For the opposition, Radicalism started confirming its vote to support final passage, but with a hard questioning of the official strategy on debt in the last two years: "This afternoon we will vote favorably on this bill as a matter of responsibility, because we want Argentina to quickly solve the situation generated by the lawsuit of the vulture funds, but this does not mean that we do not have serious differences with the government on the course of the economy in general and the situation of the debt in particular," said Miguel Bazze. "In this regard, we reaffirm that it is not true that we have reduced the debt as the government says; what took place in the Argentina is a change in the composition of the debt."
For the PRO, Federico Pinedo followed the same line: “Today we take up the debt swap, because we lost two important rulings that leave tremendous decisions for the Argentina. If we had taken it up it in time, we would have probably won. When this restructuring began, we had less money than we have today.”
For dissident Peronism, Eduardo Amadeo said: "Once again they come to the Congress when they are on the brink of the abyss. It would be much better if there was a conversation before and not this bullfighting.”
Felipe Solá was not optimistic about the result of this reopening of the swap: "We don't know if it will be successful. We suspect not, that few bondholders are going to enter this new offer. The vulture funds won't enter nor will they go away.”
El Cronista
The Congress left open the debt swap and annuls the effects of the Lock Law
With 192 in favor from officialdom and allied forces, the lower House turns the official initiative into law. Opposition criticism for the Argentine legal strategy in the U.S.
Thursday, September 12, 2013
NOELIA BARRAL GRIGERA Buenos Aires
With support from the opposition, the government managed last night to get parliamentary backing to reopen the debt swap indefinitely, with the intention to offer a sign of goodwill to the U.S. Supreme Court.
The decision of the Casa Rosada to not set a closing date for this offer aims to insinuate that the swap will remain open permanently, canceling the effects of the Lock Law of 2005, one of the hotspots in the lawsuit that Argentina faces with the vulture funds.
That was the message that the economic team left behind as it passed through Congress, and which drove several opposition blocs to demand a stronger gesture: the repeal of the lock law. But the government preferred an intermediate solution, leaving the power formally in the hands of the Congress to put an end point to the swap someday, and maintaining the legal prohibition on offering the vulture funds better conditions than those made to those who agreed to the restructuring.
Despite the consensus on the need to support initiative, the debate in the lower House took more than nine hours, after which the voting board displayed 192 votes in favor, 33 against and 4 abstentions.
Speaking in favor were Kirchnerism, UCR, the PRO, the Peronist Front and the Massa’s block, although opponents harshly questioned the Argentine legal strategy. The Civic Coalition, Proyecto Sur and the FAP came out against it.
"We want to help them get out of the jam they’ve gotten into. Do they believe that saying that we are not going to pay one peso was going to improve Argentina’s situation? " questioned Radical Ricardo Alfonsin."
The Macrista Federico Pinedo put numbers to their criticism and warned: "Thanks to all the atrocities that have been committed (by officials), we could lose another US$2 billion.”
Faced with those questions, Kirchnerism was concerned about pointing out the origin of the debt. "Some generated it and others negotiated it wrongly," the now-Massista Felipe Solá said, warning that the discussion on the reopening of the swap is also the discussion of "how the external front of the next government will be" and, therefore, he emphasized: "We will support it because we aren't sepoys (cipayos).”
Kirchnerist Roberto Feletti was given the right to point out that "today the discussion of the external restriction and political power are the key points in debate for those who aspire to be the Argentine government" and stressed that the issue of the vultures is "a battle that is worth waging."
The position was different for the CC’s Alfonso Prat Gay. "This is the first big lie of the Kirchnerist narrative. The discourse that this was a historic haircut came out very expensive, because it was not and because the New York courts ended up ruling as they did," he said.
The founder of his block, Elisa Carrió, agreed in rejecting the measure, but announced her abstention. "I am quite aware of the situation facing the Nation," he said.
For Claudio Lozano (Popular Unity), "if we pay US$173 billion dollars for a debt of similar magnitude, and we still have US$22 billion in debt and, in addition, face a lawsuit that could bring us back to 2001, what we must do is to recognize that the strategy had failed.”
At the same time, Fernando "Pino" Solanas demanded an investigation of the legitimacy of debt. "No one pays an bill that he doesn’t review," he pointed out.
Kirchnerism defended the initiative within the framework of the official policy of debt reduction and thanked the opposition for its support.
"We should be together and stick together in the same direction," said the head of the block, Juliana Di Tullio, and she stressed: "The history of the debt is a heavy one in the past and in the present, and we do not want it to be in the future.”
La Nacion
U.S. Court analyzes from the 30th if it takes up the default
It must decide its position against the lawsuit of the holdouts
Thursday, September 12, 2013
by Silvia Pisani | LA NACION
WASHINGTON.- The so-called "trial of the century" on the debt entered the end of its procedural route with the announcement that the Supreme Court of this country "will assess" on the 30th of this month whether to grant review or not to the case in which the Argentina has already had adverse rulings in two lower courts, although the execution of both sentences is stayed.
This will be, precisely, the first and crucial point that the nine judges who make up the Supreme Court will arrive at when they deliberate inside 20 days. If they decide not to take the case, the immediate consequence might be the end of the stay that now weighs over the adverse rulings, an alternative that greatly worries the authorities at Economy.
If this umbrella ceased to work, the Argentina would be exposed to what one of the lawyers defending the national state, Jonathan Blackman, described as "a cascade of lawsuits, the payment of which would not even be covered by the reserves of the Central Bank," because it would represent much more than the US$1.3 billion dollars provided for in the original ruling.
At the close of this edition, there had not been any formal expressions from the government after hearing of the announcement of what was projected as a possible immediate decision. Days ago, President Cristina Kirchner asked God to "illuminate" the members of the Court.
With a more earthly vision, the lawyers following the case agree that the chances for the Court to accept the case are scarce and they cite several reasons for this.
The eventual rejection of the case would be the worst-case scenario, according to what the lawyers agree on. The best would be precisely the opposite situation, in which one would wait at least one year until a final resolution is reached.
The judges addressed the Argentine case in an informal meeting, and then will do so again on Monday the 30th, behind closed doors, in accordance with what the Court itself reported on its website.
According to what LA NACION could learn, the judges could reach a decision on that day or, conversely, they could delay with the request for opinions from consultants and experts.
One of the advantages the Argentine government had hoped to count on at this point was a favorable opinion from the administration of Barack Obama, an intervention that is considered to have enormous influence. But, so far, one of the notable points in this situation is the silence which has prevailed, despite the requests and the efforts of the authorities of our country.
The questions from LA NACION were in vain these days before the Treasury Department. Weeks ago, a spokesman for the agency said it would evaluate "the possibility of intervening and on which occasion." But since then everything has been silent. The same thing at the State Department.
No response
The Argentina knocked on the door of the Court with a brief filed on June 23. The only backing that arrived at this court was from the French state and bondholders who had accepted the debt swaps.
Washington, as was said, and different from previous occasions, was silent, to the surprise, among others, of Foreign Minister Héctor Timerman, who days before the expiration of the deadline, publicly was confident on their participation.
The appeal concerns only the ruling of October 26 of last year in which the Court of Appeals of New York upheld the sentence of Judge Thomas Griesa that condemned the country to pay its creditors.
The one produced on the 23rd of last month, by which, sharply delineated, that same appellate court confirmed the amounts and payment mechanisms, did not arrive to be part of the process before the high Court because Argentina decided to file an extreme recourse which implies a procedural step before reaching the Court.
What is clear is that the clock has started running again. What is not yet known is what luck the country will have. But it will begin to be known soon.
El Cronista
Holdouts: the U.S. Court set a date an Argentina bets on gaining another year
On that day it will begin to analyze the first recourse of the state against the sentence in favor of the vulture funds. The government is betting on delaying the case with another pending appeal
Thursday, September 12, 2013
ESTEBAN RAFELE Buenos Aires
On Monday the 30th, the United States Supreme Court will begin to decide the fate of Argentina in the judicial process that will mark the destiny of the foreign debt. That day, the Court will start to analyze if it will take the appeal that the country filed on the ruling that orders it to treat creditors with bonds in default in the same way those who renegotiated their bonds.
The government, meanwhile, expects to win time with a parallel legal process, by which it is betting that the Court should go back to intervening for another phase of the case. That would stretch out, in the worst of cases, the possibility of losing the lawsuit for one more year and would guarantee payment on normalized debt abroad over most of 2014.
It happens that the lawsuit between the "vulture" fund NML Capital, of magnate Paul Singer, and the country is divided into two sections. In the first, the Court of Appeals upheld the interpretation of the theory of "pari passu" or equal treatment given to the holders of bonds in default, and ordered the country to pay them in the same way it pays the rest of the creditors. In the second, the appeals court confirmed the form of payment devised by Judge Thomas Griesa and ordered the country to pay 100% of the claim (US$1.5 billion) at once and to retain that money from regular debt payments.
The Supreme Court must now decide whether to accept taking up the first segment of the lawsuit. It will take place on September 30, in a private audience. The process can take days or weeks. It is highly unlikely that it will dispose of the case on the same day, since it deals with a sovereign country, experts clarified.
Official sources pointed out that this decision would not imply the lifting of the stay, meaning Argentina should not yet have to pay the sentence against it. In its ruling, the Court of Appeals of New York ruled to "suspend the execution of measures by the appropriate order of certiorari to the Supreme Court" of that country imposed on the country. That, those in the Executive interpreted, means that the stay will be valid until the second tranche of the ruling arrives at the Supreme Court. Other experts believe that oration can have several meanings and they were not strict in this regard.
Argentina on Friday appealed the contrary ruling of the appellate court of August 23 and asked that the same court hold an en banc review (by the plenary of its 13 members) on the ruling. That process could take weeks and experts assume the country’s petition will be rejected. But then, the government, represented by the New York firm of Cleary Gottlieb, will have 90 more days to appeal to the Supreme Court. Until then, they understand in the Executive, the stays remain in place. And, as the U.S. Supreme Court decides what cases it will take once a year, in the government they expect to spend most 2014 with a stay which will allow it to continue paying bonds from the swap without inconveniences.
The government yesterday ratified this strategy in a brief presented to the Supreme Court to reply to the petition from the holdouts that the Court reject the case. In this filing, Argentina warned of its intention to raise a second petition for certiorari if the en banc appeal is denied. This, according to the legal deadlines, would take place in February.
Other experts considered that this strategy is wrong and that the country should ask the Supreme Court that already unites both causes.
Scenarios
According to official sources and experts in this type of litigation, the U.S. Supreme Court can reject the Argentine case - which would be a bad precedent for the second appeal - it could accept it, or it could request an opinion from the Solicitor General of the government of Barack Obama. It could also wait for the second appeal to continue its course to join the cases together.
"The publication of the agenda of the Supreme Court, where the taking of a set of certioraris is decided, among them Argentina’s, is in line with the timing that we anticipated in reference to all remaining instances in the judicial process and, consequently, to the timing of the duration of the stay", said Finance Secretary Adrián Cosentino.
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