Saturday, March 19, 2016

Macri praises lawmakers for ‘vultures’ bill

President Mauricio Macri speaks at a rally alongside Chaco Governor Domingo Peppo yesterday.

Government settles with an additional 115 individual creditors holding US$155M in debt

As the Senate moves forward with the debate over the holdouts bill, President Mauricio Macri praised governors and lawmakers for having passed early on Thursday Lower Chamber the draft that will authorize the national government to reach a deal with the “vulture” funds.

The president’s statement came on the same day Argentina settled with an additional 115 individual creditors holding defaulted sovereign bonds for US$155 million. The government has already settled with about 90 percent of the creditors and hopes to reach a deal with those still holding out.

“We have huge and varied problems, that’s why it’s so important the step taken by Congress this week,” Macri said, speaking at a rally in Chaco. “I want to congratulate governors and legislators for demonstrating we all are wearing the Argentine jersey. We have to leave behind the long years of useless conflicts that have made Argentina unreliable and untrusted.”

Lawmakers across the political divide voted 165 to 87 in the Lower House to approve the deal, after a 20-hour debate. The ruling Let’s Change (Cambiemos) won support from dissident Peronists, the Renewal Front, Progressives and most significantly, six lawmakers from the Victory Front (FpV).

The bills seeks to abolish the sovereign payment law and the padlock laws, which prevents the country from providing the holdouts with better terms than those the nation offered to those who agreed to restructure defaulted debt in 2005 and 2010 — a key step for United States District Judge Thomas Griesa lifting the injunction against Argentina.

The debate has now moved to the Senate, where business leaders and economists attended yesterday and voiced across-the-board support to reaching a deal with the “vulture” funds. Trade union leaders also took part in the meeting of the Budget and Economy commissions and asked to defend workers’ rights.

“There’s a need to solve this default that started in 2001. The economy has to fund the deficit and it’s essential to get funding for infrastructure works,” Gustavo Weiss, head of the Construction Chamber (CAC) said yesterday. “The construction sector is going through a difficult time and the change of administration has been traumatic for us.”

Meanwhile, Argentine Rural Society (SRA) head Miguel Etchevehere backed the deal with the holdout funds because “it’s important for the country to get return to international credit markets.” The agriculture sector now only has access to loans at rates three times larger than those paid by the country’s competitors, he said.

“Over the next few years, Argentina will be able to supply food for 680 million people. That will lead to more employment. We don’t want to become the world’s barn, we want to be the world’s supermarket,” he said. “We have to close the holdouts chapter and get funding that won’t be used only by productive sectors.”

While he supported the agreement, Buenos Aires Stock Exchange head Adelmo Gabbi told lawmakers at the commission that the country could face the risk of an acceleration of payments in the future.

“If we celebrated the payment to the International Monetary Fund, to the Paris Club and to Repsol in order to have economic independence, we should do the same in order to get rid of these awkward creditors,” he said. “If an acceleration happens, the debt would become unpayable.”

UOM metal workers’ union chief Antonio Caló asked the Senate to “defend workers’ rights” in the debate over the holdouts bill, claiming many of them are going through a “difficult situation” due to an increase in layoffs.

“I hope the payment to the holdouts isn’t used to bring in more imported goods. Argentina can’t compete with China, where people work 24 hours a day just for a bowl of rice,” he said. “Argentina has been paying foreign debt for a long time that is not the fault of our workers.”

New deal

Court-appointed mediator Daniel Pollack announced the new deals with creditors yesterday, moving Argentina closer to ending the festering 14-year legal battle over its historic default.

“The parties anticipate that most of these bondholders, all of whom have both money judgments and injunctions, will opt to receive 70 percent of their claims rather than 150 percent of the principal of their bonds, both of which are options available to them,” under the terms offered by the government on February 5, Pollack said.

Argentina committed to spending US$6.5 billion in order to settle more than US$9 billion worth of claims in the US courts before Griesa. So far it has agreements from almost 90 percent of the remaining holdouts. It reached an agreement in principle with four major US holdout creditors on February 29 for US$4.65 billion. They have until April 14 to deliver the cash.

“As with all such settlements, these are subject to the lifting of the Lock Law and the Sovereign Payment Law by the Argentine Congress and the lifting of the Injunctions by Judge (Thomas) Griesa,” Pollack said.

Griesa’s ruling barred Argentina from paying creditors who settled previously in 2005 and 2010 for less than 30 cents on the dollar without also making a court-awarded payment to the holdout creditors. The injunctions were removed by Griesa on March 2.

The issue is now being heard before the US 2nd Circuit Court of Appeals, to which Argentina and the creditors asked to call a hearing on April 5 or 6.

“This group of 115 individual bondholders had appealed the vacating of the Injunctions by Judge Griesa, but have now withdrawn their appeals with prejudice,” Pollack said.

Argentina plans to sell three bonds for a total of US$11.68 billion in mid-April in order to pay the creditors in cash.

Herald with DyN, Reuters