Tuesday, December 22, 2015

Gov’t to resume ‘vultures’ talks in January

Tuesday, December 22, 2015

Gov’t to resume ‘vultures’ talks in January

Finance Secretary Luis Caputo (left) sat down with Daniel Pollack (right), the court-appointed mediator in the dispute with the holdout bondholders.

Mediator expects ‘substantive’ negotiations after meeting with Finance Secretary Caputo

NEW YORK — President Mauricio Macri’s administration and holdout bondholders are set to meet in the second week of January to start “substantive” talks toward settling a more than decade-old sovereign debt dispute, the US court-appointed mediator said yesterday.

The talks would mark a major breakthrough in the dispute, which has kept Argentina largely shut out of international capital markets.

Macri and his team have long said that settling the debt issue with the holdout bondholders, often referred to as “vulture” funds, would be a priority for his administration.

Daniel Pollack, a New York lawyer who is the mediator under the official title of “special master” said in a statement that he met for about one hour yesterday in his office with Argentina’s newly installed finance secretary, Luis Caputo, and the deputy Cabinet chief, Mario Quintana.

“The meeting was constructive, covering a range of issues, and it was agreed that they will return to New York City in the second week of January to commence substantive negotiations with the bondholders,” Pollack said in a statement released through his law firm, McCarter & English.

US credit rating agencies declared Argentina to be in default again last July after it refused to honour Griesa’s order to pay NML and Aurelius at the same time it paid other bondholders their principal and interest.

‘MIDDLE OF THE YEAR’

US District Judge Thomas Griesa, who has long overseen the litigation, urged in a hearing last Thursday that Argentina and its creditors resolve the dispute stemming from the US$100 billion default on sovereign bonds in early 2002. The case is being heard in the United States because the bonds were issued under US law.

“The government will start negotiating now and once they have the blueprint of a deal it will be brought to Congress. It should all be settled by the middle of the year,” said Senate leader Federico Pinedo, who is a close ally of Macri.

Pinedo said there a chance that Congress will be presented with the outline of a deal as soon as next month.

“It may happen that the president decides to raise it in a special session in January or February. That would be doable,” Pinedo said. “I’m sure that we will get the support for a solution that respects the national interest.”

The Senate leader insisted that Argentina is not negotiating in desperation because the way the market has been calm following the lifting of capital controls demonstrates the administration is not desperate for dollars quite yet.

“From now until March we want to give clear signs of predictability for the future,” Pinedo said.

Even before taking office, Macri made clear he thought a deal with the holdouts could be reached next year. Asked if a settlement was possible when he presented his Cabinet, Macri said: “Yes, of course.”

He didn’t say what the terms of an eventual agreement might look like.

According to analysts, striking a deal will be key for Macri’s chances of issuing new debt at lower interest rates than the country is offering at present.

SECOND TIME

Holdout investors led by Elliott Management’s NML Capital Ltd and Aurelius Capital Management have a judgment in their favour of US$1.33 billion, plus interest, which has brought their total closer to US$2 billion, sources with direct knowledge of the situation say.

A spokesman for Elliott declined to comment on yesterday’s statement. A representative for Aurelius was not immediately available.

Caputo and Pollack had already met informally on December 9 but that was before Macri was sworn-in as president the following day.

Caputo, shaking his head, did not answer any questions upon entering Pollack’s office building via a side entrance yesterday. He and Quintana were not seen leaving by a small handful of reporters and photographers who were waiting outside Pollack’s office.

Solving the sovereign debt dispute between Argentina and investors, who rejected two prior restructurings in 2005 and 2010, is seen as critical to getting the country’s economy on a more stable growth path.

Pollack has said the total amount of debt held by bondholders with judgments against Argentina is approximately US$10 billion. These judgments are based upon the principle of equal treatment, referred to in the bond agreement document as the pari passu clause.

‘ME TOOs’ IN THE MIX

In addition to NML and Aurelius, bondholders who did not participate in prior restructurings filed “me too” claims before Griesa on the same pari passu principle and were recognized by the court.

Griesa raised the country’s bill with the “vulture” funds to around US$8 billion in October after he agreed that holders of US$6.1 billion of defaulted bonds must also receive payment when the country services restructured debt.

Only two days after a hearing in Manhattan, Griesa ruled in favour of plaintiffs in 49 lawsuits seeking the same relief as Elliott and Aurelius.

The country currently has US$24 billion worth of debt still in default, including interest, with 66 percent of the bonds issued under New York legislation and 34 percent under European legislation. That means any negotiations have to include this category of holdouts because it could mean the bill with the holdouts could still grow if Griesa decides to accept more claims in the future.

Over the course of the two restructurings, 92 percent of bondholders accepted the terms offered by Argentina, which left them on the whole being paid less than 30 cents on the dollar.

Herald with Reuters

Finance Secretary Luis Caputo (left) sat down with Daniel Pollack (right), the court-appointed mediator in the dispute with the holdout bondholders.

Mediator expects ‘substantive’ negotiations after meeting with Finance Secretary Caputo

NEW YORK — President Mauricio Macri’s administration and holdout bondholders are set to meet in the second week of January to start “substantive” talks toward settling a more than decade-old sovereign debt dispute, the US court-appointed mediator said yesterday.

The talks would mark a major breakthrough in the dispute, which has kept Argentina largely shut out of international capital markets.

Macri and his team have long said that settling the debt issue with the holdout bondholders, often referred to as “vulture” funds, would be a priority for his administration.

Daniel Pollack, a New York lawyer who is the mediator under the official title of “special master” said in a statement that he met for about one hour yesterday in his office with Argentina’s newly installed finance secretary, Luis Caputo, and the deputy Cabinet chief, Mario Quintana.

“The meeting was constructive, covering a range of issues, and it was agreed that they will return to New York City in the second week of January to commence substantive negotiations with the bondholders,” Pollack said in a statement released through his law firm, McCarter & English.

US credit rating agencies declared Argentina to be in default again last July after it refused to honour Griesa’s order to pay NML and Aurelius at the same time it paid other bondholders their principal and interest.

‘MIDDLE OF THE YEAR’

US District Judge Thomas Griesa, who has long overseen the litigation, urged in a hearing last Thursday that Argentina and its creditors resolve the dispute stemming from the US$100 billion default on sovereign bonds in early 2002. The case is being heard in the United States because the bonds were issued under US law.

“The government will start negotiating now and once they have the blueprint of a deal it will be brought to Congress. It should all be settled by the middle of the year,” said Senate leader Federico Pinedo, who is a close ally of Macri.

Pinedo said there a chance that Congress will be presented with the outline of a deal as soon as next month.

“It may happen that the president decides to raise it in a special session in January or February. That would be doable,” Pinedo said. “I’m sure that we will get the support for a solution that respects the national interest.”

The Senate leader insisted that Argentina is not negotiating in desperation because the way the market has been calm following the lifting of capital controls demonstrates the administration is not desperate for dollars quite yet.

“From now until March we want to give clear signs of predictability for the future,” Pinedo said.

Even before taking office, Macri made clear he thought a deal with the holdouts could be reached next year. Asked if a settlement was possible when he presented his Cabinet, Macri said: “Yes, of course.”

He didn’t say what the terms of an eventual agreement might look like.

According to analysts, striking a deal will be key for Macri’s chances of issuing new debt at lower interest rates than the country is offering at present.

SECOND TIME

Holdout investors led by Elliott Management’s NML Capital Ltd and Aurelius Capital Management have a judgment in their favour of US$1.33 billion, plus interest, which has brought their total closer to US$2 billion, sources with direct knowledge of the situation say.

A spokesman for Elliott declined to comment on yesterday’s statement. A representative for Aurelius was not immediately available.

Caputo and Pollack had already met informally on December 9 but that was before Macri was sworn-in as president the following day.

Caputo, shaking his head, did not answer any questions upon entering Pollack’s office building via a side entrance yesterday. He and Quintana were not seen leaving by a small handful of reporters and photographers who were waiting outside Pollack’s office.

Solving the sovereign debt dispute between Argentina and investors, who rejected two prior restructurings in 2005 and 2010, is seen as critical to getting the country’s economy on a more stable growth path.

Pollack has said the total amount of debt held by bondholders with judgments against Argentina is approximately US$10 billion. These judgments are based upon the principle of equal treatment, referred to in the bond agreement document as the pari passu clause.

‘ME TOOs’ IN THE MIX

In addition to NML and Aurelius, bondholders who did not participate in prior restructurings filed “me too” claims before Griesa on the same pari passu principle and were recognized by the court.

Griesa raised the country’s bill with the “vulture” funds to around US$8 billion in October after he agreed that holders of US$6.1 billion of defaulted bonds must also receive payment when the country services restructured debt.

Only two days after a hearing in Manhattan, Griesa ruled in favour of plaintiffs in 49 lawsuits seeking the same relief as Elliott and Aurelius.

The country currently has US$24 billion worth of debt still in default, including interest, with 66 percent of the bonds issued under New York legislation and 34 percent under European legislation. That means any negotiations have to include this category of holdouts because it could mean the bill with the holdouts could still grow if Griesa decides to accept more claims in the future.

Over the course of the two restructurings, 92 percent of bondholders accepted the terms offered by Argentina, which left them on the whole being paid less than 30 cents on the dollar.

Herald with Reuters