Wednesday, July 30, 2014

Kicillof: 'We offered holdouts the same terms as previous debt swaps but they rejected the offer''

: Argentine Economy Minister Axel Kicillof arrives at the office building of mediator Daniel Pollack in New York.

With Economy Minister Axel Kicillof as the head of Argentina’s mission in New York, the meeting with so called vulture funds has ended, and Kicillof is expected to brief the press at 6.30 pm where he would explain the outcome of today's meeting. Meanwhile, expectations also soar over another meeting where holdouts were analysing an offer made by Argentine private bankers seeking to buy defaulted bonds from hedge funds suing the country.

Representatives of the ADEBA national private bank chamber jetted off to New York yesterday evening in an unexpected move to offer holdout hedge funds a last-ditch proposal that would allow Argentina to avoid a technical default ahead of today’s debt repayment deadline.

Led by Macro bank CEO Jorge Brito, ADEBA reportedly was to submit an offer either to make a US$250 million escrow deposit for the US$1.33 billion owed to the holdouts, or to take all of the bonds out of the holdouts’ hands

Hours before the news broke, Economy Minister Axel Kicillof unexpectedly arrived in New York to join the last-minute debt talks to avoid a default.

Kicillof’s appearance at the office of the court-appointed mediator presiding over the negotiations was his first in more than three weeks. The scant progress made in talks, and Kicillof’s absence, had raised questions over Argentina’s commitment to reaching a settlement with the holdouts.

The minister, who this year brokered deals with the Paris Club of creditor nations and Spanish energy giant Repsol, made no comment to reporters staking out Pollack’s office.

Both the escrow deposit and a full bond acquisition would allow for the distribution of the US$539 million deposited by Argentina to bondholders who took part in last decade’s debt swaps.

The funds were frozen by Judge Thomas Griesa, whose ruling on the credits’ pari passu, or equal treatment, clause that holdout hedge funds must be paid parallel to restructured repayments. Argentina then had a 30-day grace to make the payment effective, which expires today.

Unconfirmed reports indicated the Central Bank Governor Juan Carlos Fábrega had given his nod for the bankers to make the offer, although the chamber has no official or unofficial link to the government. An offer from ADEBA would therefore not trigger the pivotal Rights Upon Future Offers (RUFO) clause, through which restructured creditors could demand equal terms to any offered to the “vulture funds.”

There was also talk of the Central Bank subsequently dealing with the cost of the debt directly with ADEBA, which groups together national private banks, and also the capital’s Banco Ciudad as of a few weeks ago.

The chamber includes Brito’s Macro, Banco Galicia and Banco Patagonia, among others.