Clarin
Argentina and the vultures, core elements of a Paris Club meeting
A plan to close the litigation was spoken of. Concern over a judicial setback and a drop in reserves.
Friday, October 25, 2013
By Ezequiel Bargo
The Paris Club and a group of bankers analyzed the country’s intention to deactivate the litigation with a group of vulture funds. The meeting happened on Tuesday and took place in the French capital. It was organized together with the Institute for International Finance (IIF), an association that is made up of the biggest banks of the world. Officials also participated from the International Monetary Fund, the World Bank and delegates from the U.S. Treasury.
The Paris Club itself announced the meeting on its website. “The participants analyzed the litigation between Argentina and the holdouts in U.S. courts,” the statement from IIF said.
The meeting discussed the negotiations between the “friendly” bondholders of Argentina and the vulture funds as this newspaper reported last Sunday. The idea is based on at least 75% of the holders of Argentine debt issued with foreign legislation accepting giving up a part of the interest they are to collect in favor of the vultures.
The Economy Ministry is aware of this road map that was brought by a club of big debt holder funds.
Gramercy, among others, would avoid with that formula an uncomfortable situation if Argentina sees itself judicially forced to pay three vulture funds and 13 retail investors the sum of US$1.33 billion. These large holders of bonds, which participated in the swaps of 2005 and 2010, have their interests aligned with Argentina: they would be harmed if the sentence of Judge Thomas Griesa is upheld after it was sustained by the Court of Appeals in New York.
In Paris, they also heard concerns about the possible impact of a ruling against the country. The banks fear that, if that happens, incentives to organize restructurings will disappear.
In addition to analyzing the consequences of the lawsuit, the diplomats, bankers and bureaucrats of organizations meeting on Tuesday in Paris “raised doubts about the future of the fiscal front, the reserves and the weakness of the government,” a source revealed. “While on the other hand, progress with the ICSID was acknowledged.”
The country announced that it will pay five foreign companies that won lawsuits in the courts of the World Bank. Lorenzino, on a trip to Washington at the start of the month, met with U.S. Treasury officials. And there he listened to a sequence that was being worked on under his arm: to settle with the ICSID and the Paris Club.
The United States, Great Britain, Italy, Germany, Holland and Japan are some of the countries making up the Paris Club and are Argentina’s creditors. One of the different diplomatic sources consulted for this articles (who asked not to be named) confirmed that in the meeting Argentina was discussed, as well as the situation with the holdouts and the settlement to pay the ICSID debts, but there was no definitive payment proposal to settle the debt with the Paris Club.
“There is a view that everything will have to be solved,” the source said.
Tomás Canosa contributed to this report.
Clarin
Positive signal for the funds
Friday, October 25, 2013
The possibility that Argentina could close the chapter with the holdouts is exciting the banks and investment funds, while they clarify that it seems an agreement will be very difficult to close. “We take it as a positive step that the government and third parties are looking at options to agree outside of court,” said the report from Bulltick that it issued for clients around the world. “The government’s decision to pay the pending rulings from the ICSID and to talk with the IMF about the new CPI are clearly positive signals to the market,” said the investment fund. The Economy Ministry until now has made no comment about a possible agreement between bondholders and holdouts, while those close to Hernan Lorenzino already acknowledge that an agreement of this kind will not be easy to achieve because it needs the acceptance of 85% of the holders of restructured public bonds.
Sunday’s elections and the votes that Kirchnerism will obtain at the polling places also have the attention of the banks and funds that are dedicated to buying and selling financial assets. Bulltick estimated that the rise in registration of bonds and stocks in the last few weeks is because “President Fernández de Kirchner will lose power.”
Clarin
In the hands of the vulture funds: ‘good guys’ and ‘bad guys’ negotiate
Friday, October 25, 2013
by Marcelo Bonelli
The international financial community analyzed the critical Argentine currency exchange problem, fruit of the imbalances of local economic policy. It was done during a meeting in which the Paris Club, the IMF, banks and international funds participated.
At the meeting, the bankers were tough on the current economic situation and said that the external problems are a consequence of the loss of fiscal balance and the fall in the country’s reserves.
It took place on Tuesday in Paris and was presided over by the head of the French Treasury, Ramón Fernández. Also active was Clotilde L’Angevin, secretary of the Paris Club. Attending were delegated from the United States, Germany, Italy and Japan. There was a report from an emissary of the IMF and an explanation from the World Bank about the controversial agreements in the ICSID: five of which the government gave top profits to vulture funds very close to Amado Boudou.
But the “Argentine case” took up the cause of information that is circulating in the financial world. In the business community and among credit agencies they are convinced that Argentina will enter into default because the U.S. Supreme Court has decided not to accept the appeal of the ruling ordering the payment of US$1.33 billion to the vulture funds. It also came out that the discussion will not be imminent and that there will be a period of eight months.
Diplomatically, the Paris Club admitted the question in an official statement. The financiers took up Argentina’s problems at a time of evaluating, also, the difficulties of Zimbabwe, Grenada and Sudan. The text says: “The participants briefly examined the litigations in course against Argentina by reticent creditors before the U.S. courts.” And adds: “Opinions were exchanged about the wider potential and its implications for future debt restructurings.”
During the meeting there was talk about the government’s political deterioration and the difficult transition to 2015.
The currency exchange policy is also complicated by the “malpractice” of officials like Amado Boudou, Hernán Lorenzino, Mercedes Marcó del Pont and Axel Kicillof.
For that, in the Paris Club a light of hope has appeared because of some information: in secret, it was reported that the Argentine foreign negotiation has been sort of privatized. Because of the incompetence of officials, the investment funds linked to the government are operating directly in search of a solution for the conflict with the vulture funds and to thus avoid default. The leadership is being carried by Gramercy Funds, the group that was benefitted by the ICSID agreements; also participating is the law firm Cleary Gottlieb, which acquired more political protagonism. The U.S. lobby placed a former official of George Bush to defend Argentina: he is Republican former Solicitor General Paul Clement.
The proposal would be the following: that the bondholders get together, those who accepted the government’s swaps, and contribute to the payment of US$1.33 billion that the vulture funds are demanding. The decision is no act of detachment. James Taylor and Gustavo Ferraro, of Gramercy, explained it in meetings on Wall Street:
–Argentina will avoid default this way, and the bonds they have in their portfolios will not lose value.
–A payment agreement for the vultures would cause Argentine bonds to go up 20% and that would considerably increase gains for international investors.
But the operation is not easy.
They need the support of 75% of bondholders for such a transaction. It also requires a packet of political decisions from the Casa Rosada: that Cristina Kirchner accept the audit of the IMF, that statistical manipulation end and an agreement be reached with the Paris Club.
Carmen Corrales, the attorney from Cleary Gottlieb who decides everything about Argentina, transmitted to Wall Street that the President was ready to pull these questions together for Argentina to be able to go back to taking debt on the external markets.
The concerns that arose in the Paris Club are identical to those from local businessmen. It was what predominated this week, in the Argentine Industrial Union and in the IDEA Colloquium. At IDEA, it is alleged that the Central Bank convened the main bankers and demanded that they cut off lines for financing exports, so that companies would be obliged to hold on to profits.
In the UIA there is great disturbance with the leadership of Augusta Costa, the secretary of Economic Negotiations. Together with Axel Kicillof, he was in charge of the conflict over the exports of biodiesel, which ended with a drastic decision by the European Community: it halted purchases from Argentina. Now, th companies that invested in exporting are criticizing Costa’s work.
They accuse him of being useless and, also, the UIA is accusing him of allowing Brazil and Uruguay of negotiating trade agreements directly with Europe which are pushing Argentine trade complete aside.
But all of them are waiting on the future of Guillermo Moreno. The official has his own electoral bet. In his inner circle of aides he confessed that, different from government, he wants the candidate Martín Insaurralde to not have a good electoral performance.
He doesn’t forgive him for having spoken of inflation and knows that only with a stumble by the candidate can he rebuild something that no one forgives in Cristina’s circle: that he sent out the head of La Salada, Jorge Castillo, to declare that Insaurralde took bribes.
Keine Kommentare:
Kommentar veröffentlichen