Kicillof was said to have “reiterated Argentina’s willingness to keep negotiating to guarantee just, equal and legal (negotiating) conditions, which would imply contemplating the interests of 100 percent of bondholders.

Tuesday, July 8, 2014

Kicillof: stay or no chance of talks

Journalists

 throng around Economy Minister Axel Kicillof as he leaves the first day of negotiations with Daniel Pollack, the mediator appointed by US Judge Thomas Griesa.

Pollack says ‘issues have been identified’ at first meeting with government in New York

Economy Minister Axel Kicillof yesterday told a mediator in the country’s dispute with “vulture” funds that the US District Judge Thomas Griesa’s ruling against the country is “impossible” to fulfill and a stay is necessary in order to reach a solution for all creditors.

The minister reiterated that Argentina could not carry out Griesa’s ruling to immediately pay US$1.33 billion plus accrued interest to the group of holdouts led by Elliott Management and Aurelius Capital Management, according to a Ministry statement.

He also underscored, however, that Argentina was committed to continue negotiating to find a just solution for all creditors. For this purpose, Kicillof had made clear “it was necessary to reinstate the stay given that the case involved not just the litigators but could also be extended to all the creditors who did not join the swaps,” the ministry said.

More than seven percent of Argentina’s investors did not accept the tough terms of its debt swaps in 2005 and 2010.

“The minister made it clear that Griesa’s ruling, as it stands, would be impossible to fulfill,” the Ministry said in a brief statement after the meeting between the government delegation and Griesa’s mediator — or “special master” — Daniel Pollack.

The meeting between Kicillof and Pollack began at 3pm New York time and ended just before 7pm.

Kicillof was said to have “reiterated Argentina’s willingness to keep negotiating to guarantee just, equal and legal (negotiating) conditions, which would imply contemplating the interests of 100 percent of bondholders.”

The country needs to make a deal with the holdouts who rejected debt restructurings after its 2001 default if it is to avoid a new default just as it struggles with recession and dwindling reserves.

Kicillof has sealed deals with the Paris Club of creditor nations and Spanish oil major Repsol in the last few months in a bid to attract investment back to the country and regain access to global capitalmarkets, which have been virtually closed off to the country since the record-breaking 2001 default.

The Economy minister dodged a group of journalists gathered outside the Park Avenue law office where the five-hour meeting took place and slipped into a black SUV without taking any questions. Onlookers surprised by the fuss chased the pack and screamed out “Derek Jeter, Derek Jeter,” confusing the 42-year-old finance chief with the New York Yankees shortstop.

Mediating dispute

Pollack will now meet with the legal counsel of the hedge funds led by Paul Singer’s Elliot Management.

Analysts are cautiously optimistic a deal will be reached.

The country was not expected to bring pollack a payment offer, but insistence on the need for the stay to be reinstated marks a similar request that Judge Griesa had already rejected on June 28.

Pollack also released a statement after the encounter with the government delegation, also comprised by Finance Secretary Pablo López, the Economy Ministry’s Legal and Technical Secretary Federico Thea, and Deputy Attorney of the Treasury Javier Pargament.

“The discussions have been frank, the principal issues have been identified, and the parties have indicated an intention to continue meeting,” Pollack, a partner at McCarter & English, said.

Argentina attempted to pay bondholders who participated in its debt swaps a regularly scheduledcoupon payment due at the end of June, in defiance of Griesa’s order that the country could not service its restructured debt without paying holdouts.

The judge ordered that the funds deposited in the Bank of New York Mellon’s account at the Central Bank of Argentina should be returned to the country.

The country published a notice in several newspapers yesterday affirming it had met its obligations to such creditors by depositing the funds.

European bondholders last week took legal action in Belgium against Euroclear, the country’s European trustee, and the Bank of New York over their failure to distribute their payments.

If a deal is not worked out by July 30 and the country is not able to make a payment it will be considered to have defaulted for a second time in 12 years.

Me-too holdouts appear

Other defaulted bondholders who refused to engage in Argentina’s 2005 and 2010 debt swaps reportedly began to group together yesterday, with law firm Bingham McCutchen hosting a conference call to advise them.

“Given Argentina’s openly stated desire to resolve 100 percent of its debt, we predict the most valuable holdout organization will be one that credibly includes representation of as broad a base ofbonds as possible,” a Bingham McCutchen letter to investors accessed by Bloomberg News read.

The Economy Ministry says that claims from these “me-too” holdouts taking Elliot Management’s victory as legal precedent could amount to US$15 billion, half the country’s foreign-currencyreserves.

PARLASUR expresses support

The Parlasur parliament of the Mercosur trade bloc presented a declaration of support to Argentina yesterday in Montevideo, affirming that Judge Griesa’s ruling is “simply not applicable.”

“The speculative bonds led to the global economy’s systemic crisis in 2008, which stemmed from the ‘subprime’ crisis in the US, and now they want to put Argentina on its knees with the consent of the Supreme Court of the United States, to drain every last drop of blood from the economy and from the national effort to produce goods and services for the life of Argentines,” read the statement drafted unanimously by Argentine, Brazilian, Paraguayan, Uruguayan and Venezuelan legislators.

Herald with AP, Reuters, DyN