Tuesday, July 29, 2014

Lavagna backs jurisdiction switch move

Ex Economy Minister Roberto Lavagna (file photo).

A change of jurisdiction to pay bondholders who did accept the 2005 and 2010 debt swaps in Buenos Aires is “viable,” ex economy minister Roberto Lavagna said considering Argentina’s Central Securities Depository a possible option to complete the operation.

Also a former presidential candidate, Lavagna granted an interview to a radio show this morning to analyze the country’s financial scenario as the deadline to pay so called vulture funds in full ends tomorrow.

“Paying in Buenos Aires is, of course, a way. The Central Securities Depository is in conditions to do so. That is effectively a change of jurisdiction for creditors but we would need to ask ourselves which would be the reason abroad for a majority to refuse to collect,” the ex economy minister during the administration of late Néstor Kirchner told reporters, considering “a bit difficult that someone refuses to collect” if “the free availability of what is being paid is guaranteed, in dollars.”

In that sense, Lavagna showed confidence about an upcoming “favourable” sign following yesterday’s decision by US District Court Judge Thomas Griesa who allowed Citibank to redeem bonds under Argentina’s jurisdiction.

“That is a good step and (it was also) to have paid the first fee to the Paris Club.”

Though a critic of the federal government, now aligned with head of the Renewal Front opposition coalition Sergio Massa, Lavagna agreed bondholders who accepted the 2005 and 2010 debt swaps and “have been collecting with absolute normality” must be a “priority” – a position held by the Kirchnerite administration since the legal battle against so called vulture funds erupted some weeks ago, raising fears of default in Latin America’s N° 2 economy.

“It is the same position as that of the government. One can be very critic and harsh with the government for its actions and omissions but at the same time understand which the priority is,” Roberto Lavagna stressed questioning what he called the “charlatanism” of the financial sector.

“There is a lot of charlatanism in the financial sector, both local and the international, and also of those who took part in catastrophic operations such as the mega-swap (operation), giving lessons that the RUFO (clause) has no importance,” the ex official warned in reference to the Rights Upon Future Offers (RUFO) clause which stipulates that any deal reached between Argentina and holdout hedge funds must compensate bondholders who accepted restructured debt in 2005 and 2010.

“They talk but nobody offers a guarantee that it (the RUFO) will have no effect and, in any case, we must get to the deadline of the clause, which is January 1st.”