Ambito Financiero
Kicillof will define proposal to vultures before April
• He will select the offer that guarantees more dollars for the reserves
Thursday, February 20, 2014
By Carlos Burgueño
Axel
Kicillof has personally assumed, together with Finance Secretary Pablo
Lopez, the resolution of whether to accept or reject the new offer that
will be presented to the vulture funds suing the country in the United
States, in no more than a month. On the table he already has two
proposals that, today, have a pointed sting: the Swiss bank UBS and the
American bank, Goldman Sachs. He will listen in the coming days to
another idea, from HSBC of Britain; and finally, the Kicillof- López,
plus the intervention of the ambassador in the United States, Cecilia
Nahón, will mull over the proposal with the promise of the greatest
level of contributing “cash” for strengthening the Central Bank
reserves. According to the calculations of the minister and the
secretary, made before beginning the meetings to define the next
proposal to the vulture funds and the holdouts, to be successful the
negotiation could bring in, as a floor, funds for some US$1 billion or
US$2 billion.
The
basic strategy, in which both UBS and Goldman Sachs agree up to now, is
to buy the debt from the bondholders still suing Argentina and that
they gather the bonds in default for between 7 and 8 billion dollars;
with a haircut that would be much less than in the swap of 2010 (it was
63%) but with a cash payment. Argentina would then offer a long-term
bond (10 years or more), which would begin to pay under the next
president to succeed Cristina de Kirchner. For the bondholders that did
enter the swap, they would be offered a compensation or there is
speculation around when the December date expires this year, after which
(theoretically) there wouldn’t be a right to claim a greater
compensation than the bondholders that didn’t enter in any of the two
debt swaps that Kirchnerism promoted.
The
proposals, for now in the embryonic stages, were laid out by each one
of the international banks in official meetings in Buenos Aires with
Axel Kicillof and Cabinet Chief Jorge Capitanich. The first meeting was
with Goldman Sachs on January 29 and they sent the vice president of
the firm, Agostina Pechi; the executive director for Latin America,
Stephen Scherr; and executive director responsible for the Investment
Bank, Richard McNeil. The meeting with UBS was on February 12 with the
representative of the Swiss bank for Latin America, Gerard Cremoux.
The
official intention is to rapidly choose the offer that is closest to
the financial possibilities and necessities of the country, and which
rapidly begins a formal round of consultations with the holdouts and
vulture funds. These communications will be, obviously, at first
entirely between private entities and there will never be formal and
open negotiations between official representative of the Argentine
government and the vulture funds.
This
was one of the conditions for closing a deal that Goldman Sachs and UBS
carried with them to Buenos Aires. Politically, for Argentina, to sit
down at the same negotiating table with Paul Singer’s vulture fund
Elliott, the same which attached the Frigate Libertad in Ghana and is
suing (successfully) the country in the U.S. courts, is inadmissible.
About
the possibility that his fund would accept an offer of this type, the
extra-official rumors that are arriving at the eventual private
negotiators are volatile. On the one side, there are statements from
fund attorney Ted Olson and Singer himself, where it is said that the
only way to negotiate is formally, with the Argentina government making
the offer and intervening in the discussions; something that, the
parties know, is utopic. However, Elliott’s financial agent, Jay
Newman, said yesterday that “if Argentina wants to negotiate, the
dispute will be resolved rapidly.” The strategy of the vulture fund
(and its allies that still haven’t begun suing the country) is to wait
for an immediate favorable ruling after the rejection by the Supreme
Court in taking the case, to then negotiate with Argentina from a
stronger position.
From
Buenos Aires, private sources that participate in the elaboration of
the proposal that Kicillof must approve or reject, said that “Singer is a
businessman, he knows he won’t collect if he wins the lawsuit and that
the only alternative left is to sit down and discuss conditions for
collecting what some investment bank offers him.”
The
schedule that the government now has in mind is that the final proposal
be approved and presented in society before April 21. That day, the
attorneys for Argentina from the firm of Cleary Gottlieb Steen &
Hamilton (CGSH), Carmine Bocuzzi and Jonathan Blackman; together with
the associate for the litigation before the Supreme Court, Paul
Clement, will appear before the highest court to speak about the Elliott
complaint to attach the accounts of Banco Nacion. This will be,
according to the legal representatives for the country, the last chance
for making the Argentine case and convincing the judges to take it up.
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