Wednesday, April 29, 2015
President faces off with holdouts over rates
CFK says interest rate of recent bond issue is competitive but ‘vultures’ beg to disagree
The president and the so-called holdout funds clashed again yesterday, this time over how to read Argentina’s recent foray into dollar markets at an 8.75 percent interest rate.
According to President Cristina Fernández de Kirchner, “the country returned to capital markets at reasonable rates because we honour our debts and will keep on honouring them.” She added that “what we will never humour is international usury and fraud. That cannot be honoured, that is forbidden by God, it is forbidden by the Torah, the Quran and anyone who is against human exploitation.”
Meanwhile, the American Task Force Argentina (ATFA), a lobbying group financed by NML Capital — the main hedge fund suing Argentina in New York courts — begged to disagree. The lobbyists quoted an article from the Financial Times that claimed “Iraq, fighting off ISIS, can be lent to for 7.5 percent.” In a blog post, ATFA added that the same was true for “Boko Haram in Nigeria and Al Qaeda and the Taliban in Pakistan.” “How is it possible that these countries, each fighting some of the most serious terrorist threats the world has ever seen, be perceived as less risky investments than Argentina?” ATFA wondered.
ATFA’s publications against Argentina have gotten increasingly aggressive over the past few months.
Argentina is paying yields that are more than twice the world’s average, and above most underdeveloped countries, but it has now obtained rates below what it had been offered months ago, after it could not complete the payment of some of its bonds due to the blockade forced by NML Capital and others in the courts of New York District Judge Thomas Griesa. Despite the higher rates, Argentina’s bond issue was seen as a partial victory against the “vultures,” as it means that the country has more room for negotiation. After the issue was completed, Economy Minister Axel Kicillof said “this put an end to the myth that said Argentina was isolated from the world.”
If the country can raise dollars succesfully, holdout bondholders have one fewer tool with which to press Argentina into higher offers, as the country will be in less need to solve the conflict in order to re-gain access to capital markets, which some analysts thought could be closed for good for the country until a settlement was reached.
Kicillof in New York
The Economy minister travelled to New York last night to talk about debt restructuring and so-called “vulture funds” at the United Nations headquarters. Kicillof will state Argentina’s position on the matter, arguing that a sovereign debt restructuring mechanism should be put in place to regulate situations similar to the one Argentina went through after its 2001 default. Official sources said Kicillof’s speech would be part of an initiative started by the G77 developing countries plus China, which favour Argentina’s position.
—Herald with DyN