The third debt swap approved by Congress is moving very slowly. This move to show that Argentina is not a “recalcitrant” debtor still has not been put into motion. On the economic team, they are aiming to have this operation go in the first quarter. There will be official filings before the U.S. Securities and Exchange Commission and regulatory entities in Italy and Europe in general. They will not have banks nor legal advisors for the drafting of the filings; it is “living on our own” applied to debt. The market’s bet was that the swap would only be launched in Argentina but the government will move forward with that offer in the main markets, repeating the actions of 2010. Definitively, it’s another move in a plan to add a large number of holders of papers still in default.

 On the economic team, they are aiming to have this operation go in the first quarter.

 

 

Ambito Financiero

Vultures: an “en banc” rejection to an Argentine petition is coming

The third swap, still in an embryonic stage.  “Amici” are being sought.  The dance of the bondholders.

 

Monday, November 04, 2013

 

By Guillermo Laborda

 

The countdown continues in American court.  The decision on Friday in the Court of Appeals was expected.  There were no surprises: Argentina can continue in New York paying the bondholders until the final decision of the Supreme Court, avoiding the vulture funds and other creditors with paper still in default.  But the “en banc” decision is imminent from the same Court of Appeals before the end of the year, and it will be against Argentina.  That court, in plenary, will surely uphold the decision of the three judges from August 23 in which it ordered the payment of 100% of what is owed to the creditors equal with the payment that are made to the bondholders.  In a case of this relevance, with countries and third parties involved, it’s obvious that the three judges consulted with the rest of their peers on the decision.  The “en banc” appeal is simply a recourse for the country to buy time.  And time is gold for officials.

 

Once this rejection arrives, in seven months there should be a decision from the Supreme Court, in which Argentina’s chances of reversing previous sentences are very low.  Officials consulted by Ambito Financiero over the weekend pointed out that following all the processes, in 90 days the “en banc” decision will be appealed to the Supreme Court, and from there the “amicus curiae” will be filed.  The official betting is on adding the American government and stretching out the timing of the final sentence with the ups and downs of the process. It’s good to recall that in previous rounds filings from the same origin were not forthcoming.

 

The third debt swap approved by Congress is moving very slowly.  This move to show that Argentina is not a “recalcitrant” debtor still has not been put into motion.  On the economic team, they are aiming to have this operation go in the first quarter.  There will be official filings before the U.S. Securities and Exchange Commission and regulatory entities in Italy and Europe in general.  They will not have banks nor legal advisors for the drafting of the filings; it is “living on our own” applied to debt.  The market’s bet was that the swap would only be launched in Argentina but the government will move forward with that offer in the main markets, repeating the actions of 2010.  Definitively, it’s another move in a plan to add a large number of holders of papers still in default.  

 

In parallel the bondholders are in motion.  In the first place, there is the plan from Gramercy to achieve an agreement with the “holdouts” based on the sacrifice that the bondholders would have to make.  They would have to give up part of their interest and amortizations they have to collect to the vulture funds and other creditors.  Until now there is no bank that has been contracted (the candidate, Barclays, has already closed almost all of its offices in Latin America).  In the government, it is seen as an “idea” from the private sector.  Nothing more.  In the same category, there is the other plan, with the offer of an agreement led by attorney Eugenio Bruno.  Formally, they have not come into the inboxes of the Economy Ministry.  That is what they claim.

 

Where no movement is being seen is on the economic team after the agreement with companies in the framework of the ICSID, the World Bank tribunal.  Requests still have to be made now before the U.S. to restore tariff privileges that were revoked by the country over non-compliance with those sentences.  And this month the IMF board will meet to take up the progress from Argentina on the measuring of inflation and GDP.  It’s clear in the organization that the problem is one of “data entry”, not methodology in particular.  If the data going in is artificial, there is no method that can resist it.  For that, skepticism reigns.

 

But they are all minor economic issues today.  The short term is ruled by the dollar and the level of reserves.  In the meantime, measures lie ahead.  The rest, both the vultures and the IMF, are in another orbit, in the long term for Argentina.