In a dialogue with El Cronista, Antonia Stolper, of the law firm of Shearman & Sterling, who spoke at the seminar, explained that after the hgh court rejects the appeal, one will then have to wait until the Appeals court rejects the rehearing en banc (the petition of review which Argentina filed before all the judges of the appellate court and not only the 3 that ruled).

Lead Articles:

 

El Cronista: “Holdout fight: experts met in London to debate the Argentine case”

 

Clarin: “Despite the two bond swaps, the debt continued growing”

 

La Nacion: “The IMF will give more time for the new CPI, but with conditions”

 

 

El Cronista

Holdout battle: experts met in London to debate the Argentine case

 

Tuesday, October 01, 2013

 

By Maria Elena Candia

 

While the U.S. Supreme Court began taking up the case of Argentina, a panel of experts met yesterday in London to discuss what the chances are that the Court will review the appeal filed by the country on June 23.

 

It is an appeal with respect to the ruling of October 26, 2012, whereby the Court of Appeals upheld the ruling of Judge Griesa, who ordered Argentina to pay its creditors.

 

Gathered by the initiative of the Emerging Markets Trade Association (EMTA), the specialists agreed that the Supreme Court will reject this appeal by the fact that it is premature.

 

In a dialogue with El Cronista, Antonia Stolper, of the law firm of Shearman & Sterling, who spoke at the seminar, explained that after the hgh court rejects the appeal, one will then have to wait until the Appeals court rejects the rehearing en banc (the petition of review which Argentina filed before all the judges of the appellate court and not only the 3 that ruled).

 

Afterwards, the clock will run for 90 days for delivery of the certiorari (a new petition of appeal) this time in relation to the decision which the Court of Appeals upheld on August 23, which upheld the payment amounts and mechanisms, which still has not entered into the process of the Supreme Court.

 

Consulted in this regard, Marcelo Etchebarne, partner at the firm of Cabanellas, Etchebarne, Kelly & Dell Oro Maini, agreed: "It would be logical that the Supreme Court not rule on the case until it receives the second appeal.  Should the appeals court take up the en banc, it would be abstract for the Court to take it at the same time,” said the lawyer, who added that normally the highest court takes four or five days to decide which cases it will take up.

 

"I think that the consensus was that in the end, the Supreme Court will not hear the case, but that this can be delayed for many months," said Stolper.

 

In statements to El Cronista, Casey Reckman, analyst for Credit Suisse, who also spoke at the seminar, explained that if the outcome is negative for Argentina, the government will enter into default rather than pay a penny to the holdouts. "The market does not expect that the Supreme Court will reverse the case, it expects a technical default. Therefore, any positive surprise in terms of support to the (Argentine) legal arguments or any progress toward a negotiated settlement could explain a rally,” Reckman said.

 

The panelists also discussed the chances that the Supreme Court will ask the Solicitor General for an opinion in the Argentine case, and there were divided opinions. Steven Froot, of the firm of Boies, Schiller and Flexner, another of the invited experts, explained that the Court asks for the opinion of the Solicitor General of only 12 to 20 cases per year. In addition, the Solicitor General has no deadline for issuing his opinion, so that intervention in the case would delay even more the procedural deadlines, at least until 2015.

 

 

Clarin

Despite the two bond swaps, the debt continued growing

Between 2005 and 2012, almost US$70 billion was added to the state’s balance.  There was no “debt reduction”

 

Tuesday, October 01, 2013

 

by Ismael Bermúdez

 

The US$ 1.33 billion that is in dispute in American courts is just a part of the US$11.481 billion in warrants and bonds that the creditors who have not entered in the two previous debt swaps have in their hands, according to data from the Economy Ministry up to December 2012.

 

Added to this figure is US$197.463 billion which the Argentine state does acknowledge with various private and official creditors and international financial institutions. Of this total, US$ 6.108 billion - the debt with the Paris Club – not paid since 2002, plus accumulated interest and penalties of another US$4 billion. Thus, the total debt would be around US$240 billion, if one includes the amounts left to pay on the GDP coupons or on lawsuits from pensioners or state service providers.  

 

That debt requires payment of interest in pesos and dollars for the equivalent to about US$10 billion per year.  Also the debt is growing at the rate of other US$15 illion annually because part of the debt bears interest that will be capitalized and the national Treasury has a growing deficit that is covered with new debt, taken with the Central Bank and other agencies.

 

So, after the restructuring by Néstor Kirchner's government in 2005, the public debt – at the time almost US$130 billion - increased by some US$110 billion, paying off the debts of previous governments with new debt and more of its own debt.

 

How is it that the debt increased if the President said days ago that US$ 173 billion has been paid?

 

Since 2006, when the IMF was paid, the government has been paying maturities with reserves from the Central Bank or loans from Banco Nacion or from the ANSeS. Therefore there was no shrinking of the debt: there was a change of private and international organization creditors for public creditors. And continued borrowing from the Central Bank, Banco Nacion and the ANSeS to cover fiscal deficits, in part generated by the burden of interest and the GDP coupon, increasing the public debt. And the same will happen in 2014, according to the draft Budget.

 

Thus, total public debt will exceed US$250 billion by the end of 2014.

 

However, the government points out that the amount of the debt was reduced in ratio to the size of GDP, something based on a misunderstanding because debt is a clear financial liability and the calculation of the GDP is an accounting exercise whose magnitude depends on the value of the dollar. And the government assures that there is "debt reduction" because it does not consider the debt contracted with public bodies, something that is very dangerous because it would mean the formal voiding of the Central Bank, the ANSeS, Banco Nacion and other public entities.

 

 

La Nacion

The IMF will give more time for the new CPI, but with conditions

While it extended the deadline, it demanded that the new price measure does not coexist with the current one  

 

Tuesday, October 01, 2013

 

by Silvia Pisani  | LA NACION

 

WASHINGTON--One of the problems facing the future inflation index that the government will announce for next year is the strong resistance to it “co-existing” with the current one, whose low credibility already generated an unprecedented sanction from the International Monetary Fund (IMF).

 

According to what LA NACION could learn, within the body, chaired by Christine Lagarde, reservations were expressed about the future of the current index, once the government rolls out the new one. These reservations were heard by the Argentine mission to Washington, led days ago by Economy Minister Hernán Lorenzino, just to "bring positions together" with the Fund and avoid a new sanction.

 

One of the possibilities is that the prevention of a "coexistence" of two indicators is becomming a "recommendation" by the technical staff of the Fund which, at the request of Argentina, are working on the commitment made by the government to "improve" its statistics.

 

The "recommendation" for the future indicator not to coexist with the current was the only observation that the Argentine mission carried back, but was the most important, according to sources familiar with the talks.

 

As anticipated by LA NACION, one of the main consequences of these meetings was the extension of the deadline--which was originally Monday - for Argentina to present "concrete progress" in its commitment.

 

The recommendation regarding the desirability of avoiding a confusing co-existence would have been another of the weighty derivations. On the Argentine side, they argue that they are "different indicators". There are those who interpret this as not resolving what will happen with the official one and what, in any case, will happen to the previous one.

 

Together with Finance Secretary Hernán (sic) Cosentino, and a delegation of technical staff and advisors from the Ministry, the mission of our country spent two working days at the headquarters of the international organization.

 

The meetings were with members of the Directorate for the Western Hemisphere, led by Alejandro Werner, as well as technical staff from the Department of Statistics.

 

The Fund issued no official information on the discussion, nor made formal remarks in this regard. It only made a short statement that confirmed the existence of the meetings and called for "continuing the dialogue".

 

The Argentine government first tried to keep the official mission secret.

 

The meeting came almost at a deadline that, until September 29, had been fixed by the Fund for Argentina to submit concrete improvements in measuring the cost of living and the economic evolution.

 

Now, that deadline has been extended, which is added to the fact that - apart from the flexibility – the entity’s board has planned to reconsider the case until November.

 

The low credibility of statistics coming out of the National Institute of Statistics and Census (Indec) has been controversial for the last five years.

 

Last February the issue led the Fund to decide, for the first time to apply a "vote of censure" against one of its members with the quality of their statistics as a reason.

 

In July, in response to question from LA NACION, Lagarde guaranteed the "greater readiness" of the organization in “collaborating in the dialogue” with Argentina. But, at the same time, she stressed the need for the country to adapt itself to "international standards" in the matter.

 

"My obligation as a Director is that all members comply with that," she said. There was meeting between Lagarde and Argentine authorities on this occasion. Within ten days, however, there might be a return visit on the occasion of the annual Assembly of the organization.