Friday, February 26, 2016

Prat-Gay: no ‘victory’ yet on holdouts talks

Judge Griesa calls for a new hearing on March 1 with Argentina and ‘vultures’

Despite the progress in the negotiation with NML and Aurelius, Argentina hasn’t “declared victory” on its long legal battle with the “vulture” funds yet, Finance Minister Alfonso Prat-Gay said yesterday, describing the offer made by the government as “fair.”

Prat-Gay’s statements came on the same day as United States District Judge Thomas Griesa called a hearing with all creditors for March 1 to decide whether to accept Argentina’s request for the injunctions against the country be lifted.

“We haven’t declared victory yet. We’re very cautious on what we do. We’re convinced about the steps we’ve taken but we’re aware that it’s difficult to find a balance,” Prat-Gay said, speaking in the Chinese city of Shanghai where he will attend the G20 summit. “The offer made to the holdouts is fair. Macri wants to leave the issue in the past.”

A lawyer representing creditors Elliott Management’s NML Capital and Aurelius Capital Management said on Wednesday Argentina had reached an agreement “on economic terms” with the holdouts, calling the deal a “US$5 billion transaction.”

The Finance Ministry downplayed the statements, along the lines of court appointed mediator Daniel Pollack, who said the lawyer had violated the confidentiality of the debt talks.

“Over the last three months, I’ve attended international forums and based on my experience people are quite surprised over the amount the creditors are asking for,” the Finance Minister said.

US credit rating agencies said they are ready to improve the country’s debt rating as soon as it solves the conflict and starts normalizing payments for restructured creditors.

Moody’s Vice-President Gabriel Torres said Argentina’s rating would be improved “one or two levels” from the current Caa1 if a deal with the holdouts is reached. The rating could then increase even more if the country fixes its economy, he said.

Fitch director Erich Arispie said Argentina’s current selective default rating could be improved to CC if creditors start getting payments again.

“There’s a large possibility of an agreement,” Arispie told La Nación.

Upcoming hearing

Argentina’s lawyers in New York sent a letter to Griesa to inform him of Wednesday’s decision by a federal appeals court in New York, which allowed him to go ahead with lifting injunctions that have restricted the coutnry from making some of its debt payments and led US credit agencies to declare the country in technical default.

Only a couple of hours later, Griesa confirmed a hearing with the country’s lawyers and all the creditors, in which he could formally accept Argentina’s offer to the holdouts. Any papers regarding the case can be filed until February 29, the same cutoff date given by Argentina for hedge funds to accept a settlement offer.

The proposed total US$6.5 billion settlement offer announced by Argentina on February 5 represents a 27.5 percent to 30 percent discount for creditors who filed claims of about US$9 billion.

Herald staff