La Nacion: “A vulture fund that won lawsuits over the debt offers to negotiate with the government” (Samp)

Lead Articles:

 

La Nacion: “A vulture fund that won lawsuits over the debt offers to negotiate with the government” (Samp)

 

Clarin: “The vultures’ double strategy”

 

El Cronista: “Vulture fund urges Argentina to negotiate a “beneficial exit””

 

Ambito Financiero: “Vulture fund insists: “We want to negotiate””

 

Infobae: “The holdout that is confronting Argentina said that he expects a “long period” of legal battle”

 

Ambito Financiero: “Attempting to unblock World Bank credits for US$1.8 billion”

 

Infobae: “Gils Carbó says that Griesa’s sentences cannot be applied in Argentina”

 

OTHER NEWS ITEMS:

·         Cristina’s surgery went “well” according to all reports, and she is recovering in intensive care at the hospital where the procedure was done.  While several in government express private, off-the-record concern about scandal-ridden Amado Boudou taking a major public step forward so close to the October 27 elections, La Nacion reports that presidential aide Carlos Zannini’s office at the Casa Rosada “is the axis of power” while Cristina is on medical leave.   Boudou was “summoned” to Zannini’s office yesterday “and given instructions” the article notes.  Clarin reiterates how all recent surveys show that Boudou has the worst public image of anyone in the current government.

·         The details of Cristina’s medical condition, dating back to the date of the alleged head injury in August, have not been made public by express wish of Cristina herself.  La Nacion notes that such “informational scarcity” is unlike the process in most other countries where a president’s health is a matter of national importance.  In a twist of irony, presidential nemesis Jorge Lanata, the journalist with Clarin’s media group who has led the charge of exposing the Kirchner government’s corruption, has been admitted for a kidney ailment in the same hospital as Cristina.

 

 

TRENDING TOPICS/ARGENTINA on Twitter:

·         “CFK” and “Cristina” are trending this morning, with mostly supportive but some negative and dismissive tweet-chatter about the President’s health.  Also trending is “Boudou” which is almost entirely negative.

 

 

 

La Nacion

A vulture fund that won lawsuits over the debt offers to negotiate with the government

The administrators of Elliott Management promoted their proposal yesterday in the media

 

Wednesday, October 09, 2013

 

By Silvia Pisani

 

WASHINGTON.- Almost at the same time that Argentina suffered a new procedural setback before the U.S. Supreme Court in its battle with the so-called vulture funds, one of the most active and powerful litigants not only ratified urbi et orbi its “readiness to negotiate” but also laid out the “effort” it has been investing in, in vain, to achieve it.

 

"For Argentina to enter into default makes no sense, it’s time to sit down and negotiate,” said Jay Newman, one of the administrators of Elliott Management, one of the firms benefitted by the two rulings by which our country was ordered to pay more than US$1.3 billion

 

Signed by Judge Thomas Griesa and backed by the Court of Appeals of New York, those rulings are now stayed, held back by an injunction that, according to what LA NACION learned in this city, will remain in force at least until the routes to the Supreme Court run out.  But, according to what Newman confirmed and what various attorneys here are saying, the discourse of “readiness to negotiate” is growing and, above all, that the intention is made clear and publicly expressed.

 

Elliott appealed to two media with international reach for it.  On the one hand, the American network CNBC, specialized in economic content and with an estimated audience of 390 million around the world.  He said to their reporters that “default makes no sense” and that what is best for all is “a negotiated agreement.”  

 

In the newspaper Financial Times he not only upheld that message, but he did it with an extensive description of the attempts and meetings that, from 2003 to the present, Newman himself has been holding with Argentine officials.

 

Those meetings

 

The list of meeting included at least two with former Finance Secretary and debt negotiator Guillermo Nielsen.  More recently, and after the 2010 swap, with then-Finance Secretary Hernan Lorenzino, as well as with former ambassador to Washington Alfredo Chiaradia.

 

"With Lorenzino I had a more than cordial conversation, such that I left with the impression that we could work together.  At the time, we spoke of how to structure an operation that could interest” the bondholders that had not entered into the debt swap.  But then I never heard from him again,” Newman revealed.  

 

According to his story, something similar happened after, throughout 2011, with ex-Ambassador Chiaradia. "We met several times with him and with members of my team.  It gave us enthusiasm about the possibility of having more substantive conversations.  But he left his post and, since then, our attempts to see his successors were rejected outright,” he said.  

 

The article in the Financial Times does not identify who they were.  But the failures to meet seem to allude both to former Ambassador Jorge Arguello as well as the current representative, Cecilia Nahón.

 

By what LA NACION could learn, until now there was never a formal and official conversation between the parties and the Argentine government.  The text seems to corroborate that.  “Until now, we have not achieved it and Argentina has even refused to listen,” it says.  

 

Local attorneys say that the negotiation between the parties is one of the growing options that are opening up to Argentina.  That was again heard yesterday, after the setback that meant the Supreme Court rejected “for now” a review of the case.  It isn’t the final card played, but there aren’t many left in the hand.

 

"It’s very difficult to see the Court taking the Argentine case.  I think at some point they will have to negotiate,” attorney Richard Samp reiterated yesterday, from the  Washington Legal Foundation. Through Finance Secretary Adrián Cosentino, the government said that it will continue “exercising its defense.”  The consensus estimates that they will have a year ahead before reaching the final rulings.

 

 

Clarin

The vultures’ double strategy

Singer, of the Eliott fund, said that they will continue battling in court.  But his right hand man called for a negotiation.

 

Wednesday, October 09, 2013

 

by Ana Baron

 

Washington. Correspondent – One day after the U.S. Supreme Court rejected Argentina’s appeal, the vulture funds let it be known that they will implement a double strategy.  On the one hand they will continue with the legal battle knowing of the setback that Argentina suffered yesterday did not put the final point on the judicial process, as the country will file a second appeal in a couple of months.

 

On the other, the holdouts will pressure the Argentine government to sit down and negotiate with them.

 

In effect, during a conference the owner of the vulture fund Eliot Management, Paul Singer, estimated that the legal battle will not end for “some time”.

 

At that time, one of his aides, Jay Newman, published a column in the Financial Times calling on Argentina to sit down and negotiate with them.

 

As Clarin has reported, the goal of the vulture funds always has been to negotiate with Argentina on a better deal than the bondholders obtained who entered the swaps of 2005 and 2010.  It’s for that reason that they filed in court to ask for 100% of their bonds in default with the hope that one day Argentina will accept sitting down to reach a deal outside of court.  This is exactly what they have been doing in other countries.

 

But Argentina not only has refused to negotiate with them, but it has also adopted the Lock Law to prohibit it.

 

In the conference, Singer said that the rejection of Argentina’s appeal was not “a big decision” since “the Court will have other chances to listen to the case.”  He also said that since Argentina asked to borrow money under American law, that is what has allowed him to turn to the courts of New York.  Singer thinks that the problems our country is suffering from are “self-inflicted”.  He pointed out, however, that as investors they prioritize the short-term, and “are ready to forgive.”

 

But Jay Newman, Singer’s right hand man, argued from a column in the Financial Times that Argentina sit down and negotiate.

 

“For more than a decade, we have made it clear to the Argentine government and its attorneys that we are ready and that we want to sit down to discuss a resolution.  Not only have they not wanted to listen to us.  While the country could easily pay its entire debt in default tomorrow, its leaders have decided to waste the country’s money in a futile legal battle.”

 

Newman revealed that he himself sat down to talk “in good faith” with former Finance Secretary Guillermo Nielsen in 2003 and then met with current Minister Hernan Lorenzino and with ex-Argentine ambassador to the White House Alfredo Chiariadía, but none of the conversations were successful.

 

 

El Cronista

Vulture fund urges Argentina to negotiate a “beneficial exit”  

 

Wednesday, October 09, 2013

 

by EL CRONISTA Buenos Aires

 

Jay Newman, manager of the vulture fund Elliot Management, of millionaire Paul Singer, showed himself in favor of holding negotiations with Argentina to achieve “a beneficial resolution” in the judicial conflict that the country has with the bondholders that didn’t enter the swaps on local debt.  

 

“We remain willing to engage in discussions, and we believe we could reach a beneficial resolution. But we need a partner on the other side of the table. We need Argentina to be as ready as we are to consign the 2001 default to the past,” Newman emphasized.

 

Singer, in any case, admitted that the legal battle with Argentina will take “a lot of time” in the courts of the United States, after the American Supreme Court decided not to take, at least for now, the case in which millions of dollars are in play.

 

Newman, in an opinion article in the Financial Times, said that “when a country experiences a debt crisis, its leaders usually try to resolve those questions as quickly as possible.”  He lamented that “Argentina is different.”  

 

“Almost 12 years after defaulting on more than $80bn in debt, its problems remain unresolved. Our firm, which manages money for pension funds, university endowments and others, is among the remaining holders of the defaulted debt,” he explained.  

 

The Elliott manager said that “for more than a decade we have made clear to the Argentine government and its lawyers that we are ready and willing to sit down and discuss a resolution.”

 

According to Newman, at the time Argentine reopened the debt swap for the first time, in 2010, “the majority of creditors had become demoralized, so they sold their bonds” among other to his firm.  “After the second exchange, we met with Hernán Lorenzino, who was then Finance Secretary.  It was a cordial chat,” said the executive.

 

For his part, Singer, whose subsidiary NML Capital is one of the main promoters of the judicial battle against Argentina in the U.S., estimated that the process will take “a lot of time” whatever the final decision is by the U.S. Supreme Court.  Singer said this from a question made at a conference organized by The Wall Street Journal at a New York hotel.

 

The magnate said that the decision on Monday by the highest court to not take the Argentine case at the moment “is not a big decision, as the court will have other chances to listen to the case if it needs to.”

 

 

Ambito Financiero

Vulture fund insists: “We want to negotiate”

 

Wednesday, October 09, 2013

 

"It’s high time Argentina talked to its creditors,” is the headline from Jay Newman, director of Elliott Management Corporation, in an article published on Monday in the Financial Times. There, he says he tried to negotiate many times with Argentine officials before filing a lawsuit in New York. And he said his firm, together with other bondholders that didn’t enter the debt swaps, are “ready to resume the discussions.  But we need someone on the other side of the table.  We need Argentina to leave the 2001 default in the past.”

 

Continuing, here are the main points of the article:

 

·         When a nation experiences a debt crisis, its leaders usually try to resolve matters as quickly as possible. Argentina is different. Almost 12 years after defaulting on more than $80bn in debt, its problems remain unresolved.

 

·         For more than a decade we have made clear to the Argentine government and its lawyers that we are ready and willing to sit down and discuss a resolution. They have refused even to listen. Though the country could easily afford to pay all of its defaulted debt tomorrow, its leaders have chosen to waste the nation’s money and time waging a futile legal battle against its unpaid creditors.

 

·         This legal battle reached a head in August when the US Court of Appeals for the Second Circuit in New York unanimously rejected all of Argentina’s arguments, branded the country a “uniquely recalcitrant debtor” and ordered it to comply with its contractual obligations.

 

·         In a televised address just three days later, President Cristina Fernández begged the US Supreme Court to overturn the decision, but also vowed to defy the court if its ruling was not in Argentina’s favor.

 

·         Yesterday (Monday), the court denied Argentina’s petition for review. It is time for Argentina to cease its threats and to engage.

 

·         We tried to engage Argentina in good-faith talks. In 2003, I had dinner with Guillermo Nielsen, then secretary of finance. My case was that Argentina would maximize the number of creditors that would participate in its restructuring if it pursued a conciliatory and open process of negotiations.

 

·         This advice was well grounded. According to the International Monetary Fund, “extensive informal discussions” between Pakistan and its creditors yielded a 99 per cent participation rate in its 1999 exchange. In 2002, 100 per cent of Moldova’s creditors agreed to its restructuring plan after “extensive negotiations”.

 

·         Like nearly every other sovereign-debt restructuring achieved through negotiations, these exchanges were completed in months. At dinner with Mr. Nielsen, I offered my firm’s expertise. Far from taking our advice, his team refused to negotiate.

 

·         Instead, in 2005, Argentina offered creditors a take-it-or-leave-it bond exchange valued at roughly 25 to 27 cents on the dollar. Only about 76 per cent of the defaulted debt was tendered, much of it coming from Argentines who had little choice. More than half of foreign creditors rejected the deal.

 

·         In 2010, Argentina followed up with a second unilateral offer on even worse terms. But by that point Argentina’s conduct had demoralized most remaining creditors, causing them to sell their bonds to new buyers who took the low-ball offer. Our firm and a few others – along with thousands of small investors from Argentina, Italy and elsewhere – continued to push for a fair settlement.

 

·         Following the second exchange, we met Hernán Lorenzino, then secretary of finance, and spoke about how one might structure a transaction that would appeal to the remaining bondholders. Our cordial conversation left me with the impression that we could work together, but I heard nothing more.

 

·         Several times in 2011, colleagues and I met Alfredo Chiaradía, then Argentina’s ambassador to the US. We hoped engagement might eventually lead to more substantive discussions. However, he left his post – and our requests to meet his successors have been flatly rejected.

 

·         In addition, after many court hearings, I have asked Argentina’s lawyers to indicate to their client that we would like to negotiate. We have never had a reply.

 

 

 

Infobae

The holdout that is confronting Argentina said that he expects a “long period” of legal battle

Paul Singer, manager of Elliott Management, said that Argentina’s problems are “self-inflicted” and that this litigation will not have permanent impact on the country.

 

Wednesday, October 09, 2013

 

Paul Singer, owner of the holdouts Elliott Management that is suing Argentina in the United States over public debt, estimated that the legal battle will not end for “some time.”

 

"Whatever the decision that they make about the case (members of the U.S. Supreme Court), the situation will not end for quite a long period of time,” said Singer.

 

The magnate spoke in that way before a specific question, during a conference organized by the newspaper The Wall Street Journal in the luxurious New York hotel,  The Pierre.

 

About the measure adopted on Monday by the highest American court, which decided for the moment not to take up the case that his investment fund faces against Argentina, Singer said that it is not “a big decision” due to the fact that the Court “will have other chances to listen to the case if it needs to.”

 

The head of Elliott Management also rejected the idea that the lawsuit he is waging against Argentina will have an impact on other sovereign debt restructurings.  According to specialized financial media reports, the magnate – with strong ties to the Republican Party – said that Argentina was “the seventh largest economy of the world” at the end of World War II but now is “an emerging market.”

 

He said the country’s problems “are self-inflicted” by the Argentines themselves.  According to Singer, investors have a “short” attention span, by which they are “ready to forgive” and said that this litigation will not have permanent impact on the country.  He said that Argentina “agreed to ask for money under U.S. law in New York and the law help” the creditors suing the country.

 

"A beneficial resolution”

 

For his part, Jay Newman, manager of the holdout Elliott Management, came out in favor of holding negotiations with Argentina and thus achieving a “beneficial resolution” to the conflict over the public debt.

 

"We remain willing to engage in discussions, and we believe we could reach a beneficial resolution. But we need a partner on the other side of the table. We need Argentina to be as ready as we are to consign the 2001 default to the past," he said.

 

In an op-ed published in The Financial Times he said that “when a nation experiences a debt crisis, its leaders usually try to resolve matters as quickly as possible " but lamented that “Argentina is different.”  

 

"Almost 12 years after defaulting on more than $80bn in debt, its problems remain unresolved. Our firm, which manages money for pension funds, university endowments and others, is among the remaining holders of the defaulted debt,” he explained.

 

According to Newman, "during more than a decade" that holdout "has made it clear to the (Argentine) government and its attorneys” that they are “ready and willing” to sit down and “discuss a solution.”

 

"They have refused even to listen. Though the country could easily afford to pay all of its defaulted debt tomorrow, its leaders have chosen to waste the nation’s money and time waging a futile legal battle,” he lamented.  According to him, the lawsuit in the U.S. courts is a “last resort” but his intention is to achieve a negotiated settlement.

 

Details of the negotiations

 

Newman said that in 2003 he himself spoke with ex-Finance Secretary Guillermo Nielsen, among other “good faith chats” held with the government.  The manager lamented that in 2005 Argentina made a “take it or leave it offer” that was rejected – according to him- by “half of the foreign creditors.”

 

According to his version, from the moment in which Argentina launched its second debt swap in 2010, “the majority of the creditors” left were “demoralized” and “sold their bonds”, among others to his firm.

 

" Following the second exchange, we met Hernán Lorenzino, then secretary of finance", the executive reveals, in what he described as a “cordial” chat.  Newman said: “It left me with the impression that we could work together, but I heard nothing more” about the subject.

 

He also revealed that in 2011 his firm met “several times” with then-Argentine Ambassador in Washington, Alfredo Chiaradía, but once he left his post they didn’t manage to go back and see any Argentine diplomats.  

 

" Fair resolution of the 2001 default would deliver significant benefits to Argentina. It would rein in galloping inflation and reduce borrowing costs to the level of the country’s regional peers,” he said.  According to him, the country could save some US$74 billion in financing costs in the next ten years, by heading in that direction.

 

 

Ambito Financiero

Attempting to unblock World Bank credits for US$1.8 billion

• Hernan Lorenzino will do it in Washington at the annual meeting of the IMF

 

Wednesday, October 09, 2013

 

by: Carlos Burgueño

 

Argentina will attempt the impossible: unlock credits of US$800 million from the World Bank (WB) already available for this year and get it to enable new lines of credit for another US$1 billion. The entity led by Jim Yong Kim has kept all loans to the country held up for more than one year under pressure from developed countries led by the United States itself. The government of Barack Obama halted, on the entity’s board, (with the support of France, Germany, Great Britain, Japan, Spain and Italy) all credit lines naturally granted to country for being an active partner of the bank until the government accepts paying on the lawsuits it lost in the ICSID. As the government of Cristina Kirchner started the wheels of negotiation to settle debts with some of these companies for about US$500 million (including a liability with Enron), the country will not seek to have the United States begin to unlock these credits.

 

This will be one of the missions that will keep Hernán Lorenzino in Washington where he will participate starting tomorrow at the joint annual autumn meeting of the International Monetary Fund (IMF) and the World Bank. The Economy Minister will travel to the U.S. capital accompanied by the Secretary of Finance, Adrián Cosentino, and undersecretaries of Finance, Germán Plessen, and Financial Services, Victor Fuentes Castillo.

 

For Economy, unlocking credit sources is essential, since along with the loans from the Inter-American Development Bank (IADB), that never closed off even in the worst moments of the 2001 crisis, it would be the only financing at a low cost with which Argentina has been able to get in a long time.

 

The negative situation in the lawsuit against the vulture funds in the American courts probably will derive (sooner or later) into a "contempt of court" in the U.S. judiciary, which will bring as a direct consequence a situation where Argentina may not resort to the placement of voluntary debt on Wall Street for many years to come. For this reason, access to credit which is held up today in the WB would be necessary to count on extra financial liquidity in a 2014 that is expected to be complicated in terms of the supply of dollars for infrastructure. Naturally, and only by having payments current to date with the WB, Argentina could access these lines of credit held back by the United States, in efforts supported by Barack Obama himself.

 

The US President is, also, the last hope for the Supreme Court of the United States to accept the Argentine case. So, reopening channels of dialogue with the Democratic administration is essential at this time. The negotiation in the ICSID, the Court of settling differences with private companies that the World Bank manages, is essential.

 

In addition to this mission in Washington, Lorenzino will try to convince the board of the entity that Christine Lagarde manages about the benefits of the new national CPI. This was a mandatory requirement imposed by IMF for Argentina to not be sanctioned over the unclear statistical measurements from the INDEC.

 

Lorenzino and Economy Ministry officials will also, at the Joint Summit of the Fund and the World Bank, address the specific dangers of the negative American court rulings being firm in favor of the vulture funds, and will talk about the consequences that these judicial decisions may bring for future debt restructuring processes.

 

In the American capital, Lorenzino will also participate in the 5th summit of Finance Ministers from Latin America and the Caribbean of the IADB. Tomorrow, the Minister will be featured at the Summit of the Group of 24, which is made up of developing countries, and which will discuss the role of the rating agencies and the restructuring of sovereign debt. Also, tomorrow the working dinner of Finance Ministers and Presidents of the Group of 20 central banks will be held. Then, on Friday and Saturday, the annual meeting of the IMF and World Bank will be held, that Christine Lagarde and Yong Kim will preside over.

 

 

Infobae

Gils Carbó says that Griesa’s sentences cannot be applied in Argentina

In a recent opinion obtained by InfoBAE, the attorney general confirmed a lower court ruling that is presented as a precedent of non-payment and sent it to the Supreme Court of Justice.  The official rejected execution of a sentence by the New York judge that orders the Argentine state to pay public debt bond to a company.  

 

Wednesday, October 09, 2013

 

The Attorney general of the Nation, Alejandra Gils Carbó, issued a recent opinion addressed to the Supreme Court that refused payment of debt to Claren Corporation, considering that a ruling of Judge Thomas Griesa is not applicable in Argentina. In the document obtained by Infobae, the AG confirmed the ruling from Sala V of the National Court of Appeals, which rejected the claim promoted by the investment fund for the payment of public debt securities.

 

On December 12 2007, the judge of the Southern District of New York sentenced the Argentine state to pay the sum total of US$7,507,089, corresponding to principal and interest on the unpaid interest on foreign Global Negotiable Bonds 1997-2017, which had been acquired by the company. Gils Carbó asked the High Court to dismiss the execution - under the name of exequatur-claimed by the creditor, who won the judgment with Griesa’s ruling in the U.S.  

 

The text signed by the AG, specified that "the foreign judgment in this case obliges the national state to pay the public debt securities held by Claren in the conditions originally laid down". And she added: "these warrants, however, are covered by the measures provided by the national government from 2001 as a consequence of the inability to comply with the payment of debt services.”

 

The most important argument in this opinion focuses on the Law of Economic Emergency, approved during the 2001 crisis, that the Executive seeks to extend in Congress with the approval of the 2014 budget. For Gils Carbó, "the validity of the regulations was not, nor could have been, debated" in Griesa’s jurisdiction.

 

The official said that the origin of the exequatur would allow Claren Corporation to circumvent the process of debt restructuring arranged by the Argentine state.  That claim violates the local 'public order' and in turn has serious implications which "exceed the satisfaction of its credit" and affects the restructuring process.

 

Sala V of the National Court of Appeals upheld the rejection of the claim by Claren. With this decision, the company "filed an ordinary appeal and an extraordinary federal recourse.  It granted the first and by this jurisdiction being comprehensive for the full Court, it suspended the processing of the second."

 

Griesa’s ruling, according to the AG, "interferes in the exercise of the power of the Argentine government to unilaterally redefine the set of obligations in a situation of extreme emergency.”  The opinion concluded that the execution "cannot succeed", and the foreign judgment brought by Claren Corporation "ignores and obstructs" public debt restructuring measures provided for by the state.

 

The case still has not been taken up in court, although the opinion of the Attorney General is presented as a precursor of non-payment against Griesa’s rulings based on the economic emergency law. At the end of 2012, the judge ordered the payment of 100% of the debt to bondholders in default, about US$1.3 billion dollars.

 

"Although it is not duty of this Attorney General to decide on resources ordered as raised in the complaint, I have to take issue in view of the institutional relevance of the issues in debate,” Gils Carbó clarified in her opinion.

 

The Supreme Court announced on Monday it will not intervene in the case of the holdouts, in dismissing the appeal by the Argentine state and rejecting the appeal on pari passu, when at the judicial level was found that the country evaded contractual obligations by not treating its creditors equally. However, Argentina may file another appeal with the Supreme Court on the formula of payment.