The original bill had specified the removal of the Bank of New York Mellon (BoNY) as the payment agent and the designation of Buenos Aires or another location suitable to bondholders but that would also allow for regular debt payments. In addition, the bill allows for the opening of a new debt swap for bonds issued under Argentine legislation and creation of escrow accounts for the country’s holdouts and payment according to the terms of the 2010 debt swap.

Wednesday, September 3, 2014

Senate expected to pass amended debt bill

Legal and Technical Secretary Carlos Zannini (left) reportedly advised of changes to the debt swap bill.

Anti-hoarding and consumer protection bills also on the plate on an intense day of activity

The Senate is expected to give its approval today to the government’s bill establishing the local payment of debt swaps and a package of consumer-protection bills that includes controversial amendments to the Anti-Hoarding Law.

In the lead-up to today’s debate, the ruling Victory Front (FpV) amended the bill which would add France as a possible location for debt payments and the G-6 business group — which brings together the largest business groups in the country — once again lashing out against the Anti-Hoarding changes.

The inclusion of France as a possible location for the payment of debt interest payments to the country’s restructured bondholders is significant in that its legislation provides for protection against speculative attacks and presumably also may be more appealing for international creditors than Buenos Aires.

The original bill had specified the removal of the Bank of New York Mellon (BoNY) as the payment agent and the designation of Buenos Aires or another location suitable to bondholders but that would also allow for regular debt payments. In addition, the bill allows for the opening of a new debt swap for bonds issued under Argentine legislation and creation of escrow accounts for the country’s holdouts and payment according to the terms of the 2010 debt swap.

At press time last night, President Cristina Fernández once again justifed her strategy against the holdouts, rejecting an “anything goes” approach to paying the country’s debt.

The inclusion of France as a location for debt payment came only hours after the Renewal Front (FR) formally introduced an alternative bill that featured the use of French legislation for a new set of temporary stopgap bonds (see below). The FR had rejected the original FpV bill and is reportedly unwilling to give its approval to an amended version as it does not include the structural reforms that it has called for in its own bill.

Nonetheless, the FR does not have senate representation and the passage of the bill is assured even if it does not receive any opposition support. Yesterday, the Radical party (UCR) once again voiced its rejection of the debt bill, considering it unnecessary and an avenue for further litigation.

“The current situation could be aggravated if some bondholders refuse to accept the change of location of payment or if they consider that there has been a violation of the contract that was originally signed. At the same time it could also increase the number of bonds that are subject to litigation, putting the entire restructured debt in danger,” UCR bloc president Gerardo Morales said yesterday.

The centre-right PRO party has also announced its rejection on the grounds that it makes the country less attractive to future investments and the dissident Peronist bloc lead by Adolfo Rodriguez Saá has also challenged the bill, considering that an audit of the public debt must first be conducted. Radical senators yesterday also called for the establishment of such a body.

As an added ingredient, Amado Boudou will preside the Senate session for the first time since he was indicted for falsifying public documents.

Anti-Hoarding in the limelight

Senators are expected to also vote on consumer defence bills that have been widely criticized by largest business groups as unconstitutional.

Yesterday, the G-6, which brings together the heads of the country’s largest business, construction, industry, agricultural, banking and financial sectors, agreed to file a legal challenge against the Anti-Hoarding amendments should they be approved in the Senate and the Lower House.

The FpV has the numbers to secure approval in both chambers and the bills have received widespread support among consumer groups that feel that large companies take advantage of dominant market positions to their advantage.

As such, changes to the existing Anti-Hoarding Law would grant increased authority to the government to participate in the economic decision taken by producers. Furthermore, it establishes heavy fines for any violations of its terms that could reach up to 10 million pesos. The bill has already received been modified to exempt the smallest businesses and it also grants greater involvement of the judicial branch as part of any examination of productive processes.

Despite the changes, which were well-received when they were announced last week as the drafts were still in commute, the opposition has insisted that it will not lend its support to the new Anti-Hoarding Law nor the creation of a Price Observatory. However, there is great consensus among all senators for a bill that establishes an expedited conflict-resolution mechanism for consumers.

— Herald with DyN, Télam