Saturday, March 5, 2016

Prat Gay spars with Victory Front

Finance Secretary Luis Caputo (left) talks to Finance Minister alfonso Prat-Gay yesterday.

Government seals US$6.7 million agreement with ten funds and bondholders

For over four hours and after a bitter argument with his predecessor, Finance Minister Alfonso Prat Gay defended the government’s deal with holdout creditors before the Finance and Budget committees of the Lower House and urged lawmakers to pass the bill to repeal the two laws that prevent the enactment of the agreement.

The hearing came on the same day the government closed deals worth US$6.7 million with a group of small and medium-sized holdout funds and individual bondholders in New York.

Argentina has to end its 14-year litigation with the “vulture” funds as soon as possible in order for the economy to start growing again, Finance Minister Alfonso Prat Gay said, criticizing the former administration for having raised the defaulted debt from US$6.1 billion in 2002 to the current US$18.8 billion.

Alongside Finance Secretary Luis Caputo, the Finance Minister confirmed the government will issue US$15 billion in debt, US$11.68 of which will allocated to pay the debt with the so-called “vulture” funds. The rest will be used for other debt payments and to finance the fiscal deficit. Three bonds with maturities of 5,10 and 30 years will be issued in mid-April with a 7.5 percent interest rate.

“This is a state affair. If we don’t solve this, we can’t grow again. The default has terrible consequences on the functioning of the economy. We have to end it soon and on the best way possible,” Prat Gay said. “We understand it’s not a pleasant move but we have to do it for the economy to improve.”

The government seeks to strike down the Sovereign Payment and the Padlock laws — both of which ban Argentina from paying the holdouts more than the country offered to the creditors of restructured debt who took part in the 2005 and 2010 debt swaps. The clock is ticking as the country has until April 14 to repeal both laws and come up with the funds for the debt talks.

“In order to avoid austerity policies, we have to solve the fiscal situation and to do that we need access to credit markets. That means closing the deal with the holdouts,” the Finance minister said. “Having access to cheap funding will helps us fund public works, which are highly needed by all provinces.”

Also attending the hearing, former Economy Minister Axel Kicillof criticized the agreement, saying that is was “premature” and questioned why the government plans to use international banks to issue the bonds. He also disputed Prat Gay’s argument that access to credit would allow the government to fund deficit and avoid austerity policies.

“We’ll issue debt with foreign banks, which are the ones that led us to the current mess. The government is trying to hide the commissions we will have to pay them,” the current FpV lawmaker said. “I was offered better terms than the current ones but we weren’t in such a rush to seal an agreement as the Macri administration is.”

Following the same train of thought, Justicialist Bloc lawmaker Diego Bossio questioned the government decision to issue debt to pay the holdouts.

“We can’t allow the government to issue such a large amount of debt again,” said the former ANSeS social security agency head who jumped ship from the FpV.

Discussions on the Lower House committees will continue on Monday, when economist and business leaders will show their views on the deal with the “vultures.” The bill will officially be discussed on Tuesday at the committees, hoping to send it to the chamber on Wednesday.

New deal

Court-appointed mediator Daniel Pollack confirmed yesterday the Pink House closed deals worth US$6.7 million with funds and individuals, including Tortus Capital II, Tortus Capital III, Biagini, Vefling, Schivardi, Piol, Ercolani, Beltramo and Settin.

“These settlements are all subject to the conditions that the Argentine Congress lift the Lock Law and the Sovereign Payment Law, and that the Court lift the Injunctions that have been in place for the past years,” the special master said.

United States District Judge Thomas Griesa agreed this week to lift the injunctions against Argentina. Nevertheless, “vulture” funds Elliott Management and Aurelius Capital appealed his decision as well as a group of Argentine creditors — claiming that if the injunction is lifted the settlement talks could fall apart due to the pending creditors that haven’t settled.

“A few parties have appealed that order of the court. It is the hope of all concerned that the appeals will be expedited so that there can be clarity as to the finality of the order,” Pollack said.

Herald with DyN, Télam