Wednesday, April 6, 2016

Prat-Gay: ‘vulture’ deadline won’t be met

By Ignacio Portes
Herald Staff

Finance minister seeks extension, doubts bond sale to pay holdouts will be completed on time

Argentina is unlikely to pay holdout bondholders before the initial deadline set by New York District Judge Thomas Griesa expires.

Finance Minister Alfonso Prat-Gay said yesterday that with the hearing before the New York Appeals Court regarding the lifting of the injunction against the country set to take place only one day before the April 14 deadline, the government won’t be able to raise the money through bond sales on time.

During an interview at a summit in Buenos Aires on Argentina, organized by the Bloomberg financial news agency, the minister said that the single day between the hearing and Griesa’s original deadline is probably not enough time to organize and complete a succesful bond sale.

Even if it were, it is not certain that the Appeals Court will issue a ruling on the same day of the hearing.

That means that it is now up to the holdouts, led by Paul Singer’s Elliott Management, to agree to the extension of the deadline Prat-Gay said, as Griesa’s ruling says they have the right to pull out of the agreement if Argentina does not meet all requirements before April 14.

Those requirements include repealing the Sovereign Payment and Padlock laws in Congress, a move which President Mauricio Macri’s administration has already secured, but as well as paying all the holdouts which accepted Argentina’s new and improved offer, with a smaller haircut than in years past.

Due to an ammendment proposed by opposition lawmakers, the bill which repealed the laws following Griesa’s demands also states that Argentina cannot pay the so-called “vulture” funds before the New York courts lift the injunction that has been blocking the country from servicing the rest of its debt. While Griesa agreed to lift that injunction, Elliott Management’s appeal means that the issue is not settled yet.

“It’s their option to stay part of the deal (if the deadline to pay is not met) or to leave the deal,” Prat-Gay said yesterday, reiterating that Argentina is fully commited to paying and ending the conflict.

Deal still seen as likely

Although the government is sceptical about the possibility of meeting the deadline, it is still confident about finishing the deal very soon.

According to Finance Secretary Luis Caputo, who represented Argentina at the negotiating table with the holdouts, Singer and the rest of the plaintiffs don’t have much of an incenctive to pull out of a deal they previously accepted just because the country needs some days more to complete the payment.

Argentina is already organizing the bond sale, with banks that already loaned the country’s Central Bank US$5 billion in foreign currency in December acting as underwriters.

@ignacioportes