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31 agosto, 2013
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GIBRALTAR-MALVNAS y SOBERANÍA

31 agosto, 2013

 

 

—– Mensaje reenviado —–
De: CESAR GMAIL <cesarlerena@gmail.com>
Para: . . <calerena@assistancefood.com>
Enviado: miércoles, 28 de agosto de 2013 21:06
Asunto: GIBRALTAR-MALVINAS Y SOBERANÍA

GIBRALTAR-MALVINAS Y SOBERANÍA por César Augusto Lerena

 

A propósito que el gobierno local de Gibraltar colocó 75 bloques de cemento con puntas de acero en las costas de este peñasco para evitar la pesca de arrastre de los buques españoles -que por cierto es depredatoria en todo el mundo- el gobierno español de Rajoy en agosto de 2013 busca acordar una estrategia común con la Argentina, porque entiende afín la causa de Malvinas con la de Gibraltar. Pero, a nuestro entender emparentar Malvinas a Gibraltar sería un craso error de la Cancillería Argentina. Nada tienen en común, salvo dos gobiernos en dificultades, que utilizan estas ocupaciones británicas para disimular sus problemas internos. Malvinas fue ocupada a la fuerza por el Reino Unido; el Peñón de Gibraltar fue cedida por el Pacto de Utrecht por España a Gran Bretaña y el Gobierno español incluyó a la población de Gibraltar en sus negociaciones, mientras que la Argentina nunca admitió su participación. Por otra parte, los treinta mil pobladores de Gibraltar son estables, mientras que de los escasos 2.500 malvinenses plantados, solo el 10% es nativo. Finamente y lo más grave, es que España en 2005 votó a favor de incorporar Malvinas y la Antártida como territorios de ultramar del Reino Unido en la Constitución de Europa, y además, los buques españoles capturan los recursos pesqueros argentinos en el Atlántico Sur con licencia inglesa en Malvinas, bajo la mirada complaciente de los gobiernos de Argentina, contribuyendo de esta manera con el principal sostén económico de los ingleses en Malvinas.

 

Por su parte la Argentina tiene derechos históricos, geográficos y jurídicos internacionales que el Reino Unido no puede exhibir y a ello se debe en gran parte la negativa de Gran Bretaña a negociar o a confrontar en un Tribunal arbitral los títulos. El Reino Unido ha aceptado reiteradamente la existencia de una disputa de la soberanía con la Argentina, que la condiciona a “los deseos” (la autodeterminación) de los malvinenses; y este hecho, es seguramente una de las mayores fortalezas de Argentina en la controversia, ya que Gran Bretaña está reconociendo -en los hechos- que los espacios están más sujetos a la voluntad de quienes se encuentran allí que a sus intereses; todo lo contrario a lo que entiende Argentina: que las Malvinas son parte de su territorio. Para sostener esta suerte de “garante de los deseos kelpers”, Gran Bretaña sostiene el conflicto mediante la ocupación militar de las Islas; circunstancia que, más tarde o más temprano, podría debilitarse, ya sea por razones de orden económico o ante la necesidad de concentrar sus fuerzas para sostener su participación en la Organización del Tratado del Atlántico Norte (NATO). Ambas cuestiones, que no pueden descartarse en la situación global internacional.

 

Extracto de: “Política Pesquera para la Soberanía Argentina en el Atlántico Sur y Malvinas (4.8.13). Lerena, César Augusto

GIBRALTAR-MALVINAS Y SOBERANÍA

31 agosto, 2013

 

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*&gt;:) devil*&gt;:) devil*&gt;:) devil
 
 
 
 
 
 
 
 
 
 
 
 
 

mié 28 Ago 2013 a las 21:07
mié 21:07

<h3 “”=”” tabindex=”-1″ id=”yui_3_7_2_1_1377927824385_4976″>GIBRALTAR-MALVINAS Y SOBERANÍA

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GIBRALTAR-MALVINAS Y SOBERANÍA por César Augusto Lerena

A propósito que el gobierno local de Gibraltar colocó 75 bloques de cemento con puntas de acero en las costas de este peñasco para evitar la pesca de arrastre de los buques españoles -que por cierto es depredatoria en todo el mundo- el gobierno español de Rajoy en agosto de 2013 busca acordar una estrategia común con la Argentina, porque entiende afín la causa de Malvinas con la de Gibraltar. Pero, a nuestro entender emparentar Malvinas a Gibraltar sería un craso error de la Cancillería Argentina. Nada tienen en común, salvo dos gobiernos en dificultades, que utilizan estas ocupaciones británicas para disimular sus problemas internos. Malvinas fue ocupada a la fuerza por el Reino Unido; el Peñón de Gibraltar fue cedida por el Pacto de Utrecht por España a Gran Bretaña y el Gobierno español incluyó a la población de Gibraltar en sus negociaciones, mientras que la Argentina nunca admitió su participación. Por otra parte, los treinta mil pobladores de Gibraltar son estables, mientras que de los escasos 2.500 malvinenses plantados, solo el 10% es nativo. Finamente y lo más grave, es que España en 2005 votó a favor de incorporar Malvinas y la Antártida como territorios de ultramar del Reino Unido en la Constitución de Europa, y además, los buques españoles capturan los recursos pesqueros argentinos en el Atlántico Sur con licencia inglesa en Malvinas, bajo la mirada complaciente de los gobiernos de Argentina, contribuyendo de esta manera con el principal sostén económico de los ingleses en Malvinas.

Por su parte la Argentina tiene derechos históricos, geográficos y jurídicos internacionales que el Reino Unido no puede exhibir y a ello se debe en gran parte la negativa de Gran Bretaña a negociar o a confrontar en un Tribunal arbitral los títulos. El Reino Unido ha aceptado reiteradamente la existencia de una disputa de la soberanía con la Argentina, que la condiciona a “los deseos” (la autodeterminación) de los malvinenses; y este hecho, es seguramente una de las mayores fortalezas de Argentina en la controversia, ya que Gran Bretaña está reconociendo -en los hechos- que los espacios están más sujetos a la voluntad de quienes se encuentran allí que a sus intereses; todo lo contrario a lo que entiende Argentina: que las Malvinas son parte de su territorio. Para sostener esta suerte de “garante de los deseos kelpers”, Gran Bretaña sostiene el conflicto mediante la ocupación militar de las Islas; circunstancia que, más tarde o más temprano, podría debilitarse, ya sea por razones de orden económico o ante la necesidad de concentrar sus fuerzas para sostener su participación en la Organización del Tratado del Atlántico Norte (NATO). Ambas cuestiones, que no pueden descartarse en la situación global internacional.

Extracto de: “Política Pesquera para la Soberanía Argentina en el Atlántico Sur y Malvinas (4.8.13). Lerena, César Augusto

IRRECUPERABLE CRISTINISMO

30 agosto, 2013

Leo http://www.lanacion.com.ar/1615260-los-errores-de-calculo-de-la-presidenta donde se comenta que la Presidenta pudo haber bajado cargas impositivas antes de las PASO, algo imposible cuando el oficialismo sabe que perderá irremediablemente el Poder en diciembre de 2015.

Si yo fuese Presidente Ladrón, prefiero aprovechar cada uno de los días que me quedan al mando, para acumular mas riqueza material y poder defenderme en el futuro. Los compañeros peronistas desaparecen cuando el buque se hunde, porque cual ratas nadan hacia la seguridad, y eso sucede también en los demás partidos autoritarios bandidescos, como resultó la peronizada alfonsinista Unión Civica Radical. El fascismo corrompe a los humanos muchísimo, casi tanto como el nazismo, pero Argentina es un pais con memoria corta, en veinte años, la gente se habrá olvidado de Raul Alfonsin, Rafael Videla, Carlos Menem, Duhalde y Néstor, y tendremos mejores gobernantes que hoy. Convencido estoy – casi sería una regla – que de veinte en veinte años, Argentina progresamos. Intentaré verificarlo. El 30 de agosto de 1993 el Presidente era Carlos Menem, y su convertibilidad había prácticamente terminado con la hiperinflación alfonsinista. Pero el precio de los bienes que Argentina produce y exporta en forma natural – siguiendo las leyes del invencible mercado global – valían internacionalmente poco, comparando con el precio de los granos desde el inicio del cristinismo, cuando  subió mucho, aunque hoy  haya  descendido un poco. Mas la presión impositiva fascista aumentó demasiado, y la economía argentina parece llevarnos otra vez a la frustración y la hiperinflación.

Pero en algo progresamos en estos veinte años:  hoy es imposible que exista otro golpe de Estado encubierto como el que le hicieron en el 2001  (sólo doce años atrás) al Presidente de la Rúa, para retomar los autoritarios el Poder. Dos años antes, Eduardo Duhalde había competido electoralmente para ser el Presidente continuador a Carlos Menem, y fue derrotado por de la Rúa. Eso motivó al fascismo arcaico manipular las cosas para que el perdedor en las urnas resultara nombrado Presidente, con el objetivo de destruir la moneda confiable y de esa forma, poder el fascismo seguir enriqueciéndose. Diariamente, en todo  país fascista,  mucho dinero ilícito pasa a manos de sus gobernantes corruptos nacionales, provinciales y municipales. En países republicanos (para mi lo opuesto a los fascistas donde el  Amo maneja a la gente y a la economía) los Gobernantes no pueden enriquecerse ostensiblemente.

Para que un país progrese, el Estado de Derecho es fundamental: los capitales acuden a los países que los respetan, y huyen de los que tienen gobernantes bandidos. Por eso, Argentina se descapitalizó con Duhalde, Nestor y Cristina Kirchner, y hubo que intentar engañarnos desde el Poder con estadísticas falsas sobre inflación y crecimiento de precios (en realidad, perdida del valor de la moneda argentina emergente de que el Estado nos roba con impunidad, durante el fascismo que padecemos).

EL PUEBLO ENGAÑADO

Discrepamos con http://www.labotellaalmar.com cuando allí se sostiene que los Kirchner hacen trampas electorales directas. No hay fraude electoral desde hace años, excepto en algun apartado munPor el contrario, a Néstor lo eligieron porque Duhalde había usado el dinero estatal para desprestigiar al posible nuevo presidente Carlos Menem, y algo raro l hicieron al turco, para que desistiera de su intento de tercera presidencia, abandonando la rueda final del balotaje, cuando iba superando a Nestor Kirchner por 3 puntos. Al retirarse Menem de la carrera presidencial  ganó el que no hubiera sido electo, sin apoyo estatal. Y como Duhalde generó hiperinflación altísimo (de la noche a la mañana, de un peso un dolar, pasamos a  dos pesos un dolar. Implicó un cien pos ciento DIARIO,  una grosería, mas hacia agosto de 2001 el tope llego un día a cuatro pesos por dolar, y allí el fascismo duhaldista advirtió que debía acortar su mandato y se apresuró a llamar elecciones y a licitar cual candidato oficialista le convenía al Poder que se desintegraba por incapacidad.

Con el nuevo gobierno de Nestor, y la nueva esperanza de alguien honesto, el dolar bajo a tres pesos por unidad, pero luego Cristina ambicionó su reelección, dilapido fortunas  y la inflación llegó a tocar los diez pesos por dolar, a pesar del cepo cambiario actual y los esfuerzos para contener la devaluación al menos hasta las próximas elecciones de Octubre. La inflación castiga a los gobernantes bandidos, la hiperinlflación no perdona, deben renunciar… Un caso evidente fue Alfonsín…

Hoy, Cristina no tiene poder político, pero pareciera que puede económicamente favorecer a mucha gente, incluyendo los suyos. Mas como abanderada política, resta votos.  El hijo de Hitler, de haber existido, no hubiese ganado las elecciones presidenciales de Alemania Libre, a poco tiempo de la derrota del Tercer Reich. El hijo de Cristina, Máximo, difícilmente ganaría la gobernación de su provincia o la intendencia de su pueblo. Porque la gente odia naturalmente al autoritarismo mentiroso, y todo el mundo lo sabe. En el primer  momento, quien accede a un cargo ejecutivo importante, tipo Presidente, Gobernador o Intendente Municipal, debe tomar la decisión de dejar que el sistema fascista ladrón continúe, o impedirlo. Y sabemos que intentar darse vuelta el Capo Mafioso, apenas electo, implica un riesgo. Por eso, en los partidos políticos mafiosos hay muchos afiliados y partisanos, y en los partidos políticos serios y honestos hay menos.

De a poco, en dos veintenas de años, la sociedad obligará a que Argentina tenga Presidentes mas honestos que hoy, e incluso, mejores gobernantes e intendentes en casi todo el país. Un intendente corrupto será la excepción, espero.

Pero quien suceda a Cristina se verá otra vez – como le sucedió a Carlos Saul Menem – a frenar la hiperinflación. Y para mantener una moneda  nacional propia seria y estable, hace falta un Estadista, alguien honesto y decidido, hoy difícil de ubicar entre los hipotéticos sucesores de la Presidenta en el 2015. Todos los que estuvieron en altos cargos desde Duhalde hasta hoy, son gente que en algún momento vio cosas raras y calló, sea por temor, o porque se beneficiaba de ellas.

Una pena que Cristina no pueda, aunque quiera, solucionar el tema inflación, que es el motor de la inseguridad nacional actual. En Babel, cuando la gente perdió el común lenguaje, se dice que su mítica Torre se desplomó, porque la gente no se entendía entre sí. Y la moneda estable equivale a ese lenguaje común que la gente de Argentina entiende, y usa para medir valores estables. Sin dicha moneda, el ahorro bancario no existe en cantidad suficiente, y por ende, el crédito a largo plazo tampoco. Resultado es escasez de  viviendas y gente desempleada, que podría conseguir trabajo privado digno en las múltiples industrias vinculadas a la construcción. Construir es fácil, teniendo dinero.

Cristina Presidenta se ha transformado en propietaria constructora hotelera en el sur, y se dice consiguió créditos para hacerlo.  En países sensatos republicanos, no solo el Presidente consigue créditos. El mercado los provee, porque el ahorro y el crédito – cuando se les permite actuar en libertad – hacen que los proyectos que requieren financiación a largo plazo se puedan concretar. En los países bandidos, es imposible, al punto que los dictadores tercer mundistas endeudan a sus países con la banca extranjera, incluyendo el Fondo Monetario Internacional y el Banco Mundial, y normalmente, el sistema fracasa: los tiranuelos locales se quedan con el dinero, la obra publica no se construye, y cabe recordar que Carlos Saul Menem denominó a la represa internacional de Yaciretá como el “Monumento a la corrupción”.

Algo similar estaría intentando hacerse hoy en Santa Cruz, anegando tierras recientemente compradas por kirchneristas para crear una usina hidroeléctrica carisma estatal – a construirse por empresarios oficialistas –  que el país no necesita en ese lugar. Igual que cuando el peronismo construyó una represa paga por el Estado para que una empresa privada pudiese tener energía barata y fabricarse aluminio nacional por parte de Aluar, Provincia de Chubut, porque la materia prima del aluminio es la electricidad barata.  Conclusión: empresarios ricos, porque el Estado gratis fabricó una obra faraónica para producir electricidad barata. Y estado pobre, y gran desocupación, porque al fascismo no le importa la gente, sino el bienestar de los amos.

Argentina no salimos del nivel medio, y no alcanzamos  nivel de país bien gobernado. Decía Jorge Luis Borges que  el peronismo no es bueno ni malo, sino INCORREGIBLE.

ARGENTINE UPDATE – Aug 19 to 30, 2013

30 agosto, 2013
=======================
MONDAY, AUG 19TH
 
 
 
 
 
 
 
 
 
 
 
 
 
1. US APPEALS COURT UPHOLDS RULING ORDERING ARGENTINA TO PAY BOND DEBT FROM 2001 DEFAULT (The Washington Post)
By Michael Warren
August 23, 2013
NEW YORK — A U.S. appeals court gave Argentina’s spurned bondholders a substantial $1.4 billion victory on Friday in their lengthy legal battle to collect debts unpaid since the country’s world-record 2001 default.
The 2nd U.S. Circuit Court of Appeals in Manhattan unanimously rejected every Argentine argument, saying the country had failed to provide any proof that “cataclysmic repercussions” could result if it’s forced to keep the promises it made in its 1990s bond contracts.
“What the consequences predicted by Argentina have in common is that they are speculative, hyperbolic and almost entirely of the Republic’s own making,” the three-judge panel wrote.
The only good news for Argentina was that the judges stayed payment pending a U.S. Supreme Court appeal. The high court rarely accepts such cases, but the stay probably puts off any final decision until next year, well after Argentina’s congressional elections in October.
President Cristina Fernandez has publicly vowed to pay “not one dollar to the ‘vulture funds’,” led by New York billionaire Paul Singer and other U.S. investors, whom she accused of preying on countries in crisis. Argentina’s lawyers even told the judges that her government won’t pay no matter how they rule.

Argentina also made a point backed by the Obama administration and the International Monetary Fund: That the court’s method of forcing payment, by stopping other bond payments if it doesn’t comply, could destabilize the global financial system and make future debt relief much more difficult worldwide.

But the judges said “such cases are unlikely to occur in the future” because “Argentina has been a uniquely recalcitrant debtor.”

 

“Our role is not to craft a resolution that will solve all the problems that might arise in hypothetical future litigation involving other bonds and other nations,” the judges added.

 
Argentine officials have warned that the impact of a ruling against the country could be severe, since a novel payment formula already generally upheld by the appellate court last year could prompt the South American government to default again if it doesn’t comply.
But the judges essentially said the Fernandez government would only have itself to blame if that happens.
Activists who believe that powerful lenders should take a backseat to a country’s citizens during sovereign debt crises criticized the ruling.
“The religious community is saddened by today’s decision as it hurts poor people around the globe,” Eric LeCompte said in a statement from the Jubilee USA Network, a religious anti-poverty campaign. “Our eyes are on the U.S. Supreme Court. We pray the court will not forget the world’s poor as they consider taking the case.”
But Theodore B. Olson, a lawyer for bondholder Elliot Management Corp., said the decision was sound.
“Today’s unanimous, well-reasoned decision appropriately condemns Argentina’s persistent violation of its obligations and its extraordinary defiance of the laws of the United States and the orders of U.S. courts,” Olsen said in a statement. “It confirms that Argentina is not above the law.”
Fernandez made no immediate comment about the ruling, which came down as she met privately with top ministers inside her official residence in suburban Buenos Aires.
The U.S. case stems from Argentina’s financial crisis a dozen years ago, when the government defaulted on $100 billion in debts, and some investors scooped up nearly worthless Argentine bonds. Fernandez’s late husband, President Nestor Kirchner, eventually offered creditors new bonds that initially paid less than 30 cents for each dollar of bad debt. More than 90 percent of bondholders agreed; the rest sued.
This small fraction of bondholders, many of whom bought the debt securities at cut-rate prices, demanded that Argentina make good on its promises to pay 100 percent plus interest in the event of a default. U.S. District Judge Thomas Griesa agreed, and ordered payment in cash of $1.3 billion, plus interest to Singer’s NML Capital Ltd. and 18 other holdout creditors.
When Argentina issued the bonds in 1994, it promised to treat them “at least equally with its other external indebtedness,” the appeals court wrote. “As we have held, by defaulting on the bonds, enacting legislation specifically forbidding future payment on them, and continuing to pay interest on subsequently issued debt, Argentina breached its promise of equal treatment.”
Exasperated with Fernandez’s refusal to pay, Griesa finally agreed with the drastic approach suggested by NML: He would hold the Bank of New York and other U.S. financial institutions in contempt if they don’t become the court’s enforcers, blocking Argentina’s efforts to pay other bondholders if it hasn’t first paid the plaintiffs an equal amount.
The proposed formula sent shudders through the international bond business last year and prompted dozens of friend-of-court objections, including warnings from the U.S. Treasury, the U.S. Federal Reserve and the nation’s leading banks that the judge’s remedy mustn’t do anything to slow down the system that smoothly handles electronic transfers of trillions of dollars in transactions every day.
The judges countered that their ruling “affirms a proposition essential to the integrity of the capital markets: borrowers and lenders may, under New York law, negotiate mutually agreeable terms for their transactions, but they will be held to those terms.”
Economist Arturo Porzecanski, an emerging markets specialist at American University in Washington, said no other country in modern history has so stubbornly refused to honor its commitments, not only to repay sovereign debts but also to comply with arbitration rulings and pay nearly $9 billion it owes in principal and interest on loans from import-export agencies in Europe, Japan, the US and beyond, as represented by the Paris Club of international lenders.
For all these reasons, he said it’s not likely that the ruling will harm any country other than Argentina.
“We’ve never seen such a rogue sovereign debtor like we’ve had in Argentina. Thanks to that, we’ve now seen the limits of what’s possible, what’s the meaning of all those financial contracts, what’s the potential for collecting,” Porzecanski said. “This is legal history in the making.”
Charles R. Blitzer, a former IMF official and a consultant with significant experience in debt restructurings like Argentina’s, said the ruling should end concerns that it will be harder to put together rescue packages calling for creditors to accept less than they are owed by countries in distress. The judges “went out of the way to emphasize this is a very narrow application” because of Argentina’s specific behavior,” he said.
Blitzer urged both sides to negotiate a settlement in light of this ruling.
Argentina’s government has made it clear throughout that it will instead attempt a “plan B” maneuver, and try to persuade bondholders to accept payments somewhere other than New York, beyond the reach of U.S. justice, said Juan Pablo Ronderas of the abeceb.com consultancy in Buenos Aires.
“It forces the government to try some financial engineering,” he said.
The judges appeared to warn any would-be partners of Argentina against such a ploy in a footnote to their ruling that referred to “whether U.S. sanctions legally apply to non-U.S. persons or institutions,” Porzecanski noted.
“It’s a salvo across the plan B bow,” he said. “The judges have said that just because you’re a non-U.S. financial entity, don’t think you’re beyond the reach of U.S. policy.”
2. ARGENTINA’S DUBBING DECREE PROMISES VOICE-OVERS IN A ‘NEUTRAL’ LOCAL ACCENT (The Washington Post)
August 23, 2013
BUENOS AIRES, Argentina — Argentines call popcorn “pochoclo,” but you wouldn’t know that watching television here, where many shows are made in the U.S. and come dubbed by actors with Mexican or Spanish accents who call it “palomitas.”
In a bid to recover part of Argentina’s lost cultural heritage, create more jobs and stir up nationalist pride in an election year, President Cristina Fernandez has decreed that certain broadcast TV shows must be dubbed instead into Argentina’s lyrical brand of Spanish, though stipulating the language must be “neutral” enough for all Latin Americans to understand,
The move won praise from Argentine film director Carlos Mentasti, whose most recent hit, “A Chinese Tale,” beautifully captures a Buenos Aires culture clash. He complains that something important is lost when kids grow up listening to voice-overs that sound nothing like how their families and neighbors talk.
“Impregnated by television and videogames, Argentine kids often use, from a very young age, words that aren’t part of our idiosyncrasy,” Mentasti said. “That’s why supporting everything that’s ours when it comes to culture is always positive.”
That hasn’t stopped the move from being lampooned on social media around Latin America, playing on the stereotype that Argentines consider themselves more European and therefore superior to all their neighbors.
The Argentine way of speaking is highly distinctive, especially when served up in the “porteno” accent that instantly marks people from the nation’s capital. Spanish here was heavily influenced by the waves of European immigrants who arrived in South America a century ago, and Argentines still employ grammatical constructions considered a bit archaic in many other Latin American countries.
A page for parodies on Facebook, fed by Twitter with the hashtag #doblajesargentinos, has earned 60,000 likes as people invent new Argentine subtitles for classic movie scenes. For example, while “Play it again, Sam” in Casablanca, directly and neutrally translated, might be expressed as “Tocala de nuevo, Sam,” someone suggested that Argentine dubbers would employ an off-color chant crowds shout at rock concerts to encourage bands to play an encore.
Much of the slang Argentines speak daily is too raw to be printed in family newspapers, but there have been tamer posts, too, like an Argentine Darth Vader saying “Lucas, soy tu viejo,” as in, “Luke, I’m your old man” rather than “Luke, I’m your father.”
The measure implements a never-enforced, 25-year-old law requiring that foreign-language shows, movies and commercials that are broadcast on local television must be dubbed by actors who share “the phonetic characteristics” of Argentines.
All such content must be registered with the government, and any station or content provider failing to comply will be fined. The money will go to fund Argentina’s filmmaking industry.
The decree is great news for local actors who will get more work dubbing and be able to charge intellectual property rights for movies, Argentine Dubbing School director Dany de Alzaga said. But the July 15 decree, which gives government regulators until Sept. 15 to implement the law, left many questions unanswered and provided for several major exceptions.
It ruled out new voice-overs for imported content that arrives already dubbed in another country’s Spanish. It applies only to broadcast television, not cable TV or films shown in movie theaters, and it can only be enforced for content aimed solely at Argentine audiences, exempting shows that are broadcast to many countries. Weeks after the decree, the two government agencies in charge of implementing the law are still waiting for guidance from the presidency on how to go about it.
The law doesn’t say who is expected to foot the bill for the new dubbing, and it is also unclear how it will affect subtitles.
A group representing the hearing-impaired is concerned enough to circulate an online petition insisting that dubbing not replace subtitles that make watching television possible for more than a half-million Argentines who have hearing disabilities.
Others say the move has less to do with culture than stoking nationalism ahead of midterm congressional elections on Oct. 27.
But for many Argentines, those criticisms — and the ribbing of their Latin American neighbors — is of secondary concern. They say Argentine culture must come first, and that citizens have a right to listen to programs that sound right to them.
“It’s true that Argentines feel quite different. It’s also true that this ‘neutral’ or ‘Latin-American’ tone we hear on many programs doesn’t represent us,” said philosopher and writer Alejandro Rozitchner. “I don’t know if this law is good or bad, but it’s true that years and years of watching dubbed programming generates feelings of something foreign: We don’t speak this way.”
3. COURT RULES AGAINST ARGENTINA IN BOND CASE (The Wall Street Journal)
By Shane Romig And Chad Bray
August 23, 2013
A U.S. appeals court ruled in favor of Argentina’s holdout creditors in their bid to be paid in full on long-defaulted bonds.
That sets the stage for a Supreme Court showdown and increases the odds that Argentina will default for the second time in just over a decade.
The U.S. Second Circuit Court of Appeals in New York ruled Friday that if Argentina keeps up its payments to creditors who accepted a discounted restructuring offer, then it also must pay a group of holdout bondholders 100% of the roughly $1.33 billion they are owed in principal and accrued interest. However, it kept a stay in place on enforcement of the ruling while the U.S. Supreme Court decides whether to review the case.
“It’s a tough ruling, and it seems they accepted all the plaintiffs’ arguments,” said Eugenio Bruno, an attorney at Argentine law firm Estudio Garrido, which represents several creditors that accepted the swap offers.
The Supreme Court could decide whether or not to hear Argentina’s appeal shortly after the justices come back from break on Oct. 7.
The ruling “condemns Argentina’s persistent violation of its obligations and its extraordinary defiance” of U.S. laws and courts, said Theodore B. Olson, attorney for plaintiff NML Capital Ltd.
Other creditors who accepted the bond swaps called the ruling unfair but took heart at the suspension of enforcement.
The reaction in the bond market was muted, as many investors were expecting the court to rule against Argentina, analysts said. Argentina’s sovereign dollar bonds weakened in thin trading. Analysts said the widely expected ruling left these bonds with little reason to climb significantly higher after seeing gains over the past few weeks.
“I think it’s mildly positive [for the bonds] because it buys Argentina some time on their appeal effort,” said Siobhan Morden, head of Latin America research at Jefferies.
The cost to insure Argentina’s sovereign debt against default rose Friday, reversing earlier declines seen immediately after the ruling. It currently costs $2.5 million annually for five years to protect $10 million in Argentine debt from default, from $2.28 million late Thursday, according to data provider Markit.
“We look forward to the opportunity to present the Exchange Bondholders’ position to the Supreme Court,” said Sean O’Shea, of O’Shea Partners, co-counsel with Boies Schiller & Flexner LLP for the Exchange Bondholders Group and Gramercy Funds Management LLC.
Argentina has been locked in a long-running battle with a group of hedge funds led by Aurelius Capital Management and Elliott Management Corp.’s NML unit, which are suing for full repayment of their defaulted bonds. NML was founded by U.S. hedge-fund billionaire Paul Singer, who has a history of buying distressed debt on the cheap and pursuing payment at face value. They have pursued Argentina in courts across the globe, and NML even temporarily seized an Argentine navy ship in training in Ghana for several months last year before a United Nations tribunal ordered it released.
The holdouts have successfully argued in U.S. courts that the equal-treatment clauses in their defaulted bonds mean those securities have the same payment priority as the new bonds Argentina issued to creditors in heavily discounted debt swaps in 2005 and 2010.
Argentine economist Nicolas Dujovne said that the decision to stay the ruling for now eases pressure on the government of President Cristina Kirchner, which otherwise could have been pushed into making nationalistic decisions on the matter ahead of congressional elections in October.
Analysts say Argentina may seek to avoid complying with a definitive ruling by defaulting on its overseas bonds and then reissuing debt under local law—outside the reach of U.S. courts—to compensate those creditors.
Argentine officials had no comment Friday, but earlier this year, Vice President Amado Boudou said the government would continue to pay holders of the restructured debt even if its payment proposal failed to sway the U.S. courts.
Ordered by a lower U.S. court to offer equal payment terms to holders of the restructured bonds and the defaulted bonds, Buenos Aires earlier this year proposed giving the holdouts discounted bonds similar to the ones other creditors agreed to accept in the previous debt restructurings.
The Second Circuit said that offer wasn’t enough and slammed Argentina’s “intention to defy any rulings of this Court…with which they disagree.”
The case has ramifications for future global debt-restructuring offers. International Monetary Fund officials have said that if the holdout creditors prevail, investors may be more inclined to resist other nations’ debt-restructuring offers, in the hopes of getting a fuller payout.
However, the Second Circuit played down those broader implications. “This case is an exceptional one with little apparent bearing on transactions that can be expected in the future,” the court said in its ruling on Friday.
“Cases like this one are unlikely to occur in the future because Argentina has been a uniquely recalcitrant debtor and because newer bonds almost universally include collective-action clauses which permit a supermajority of bondholders to impose a restructuring on potential holdouts,” the court said.
“There’s a lot of uncertainty and there’s potential for default after the Supreme Court rules or decides not to rule,” said Steffen Reichold, an emerging-markets economist at Stone Harbor Investment Partners, which has $60 billion in assets under management.
Argentina’s battle with the hedge funds stems from the 2001 default on about $100 billion, which was the largest ever at the time. Since then, the Argentine government has managed to restructure about 93% of that debt, issuing new bonds to creditors.
4. HEDGE FUNDS WIN RULING IN ARGENTINA BOND CASE (The New York Times)
By Peter Eavis
August 23, 2013
A dogged group of hedge funds secured a significant victory in a federal appeals court on Friday in a case that is likely to have far-reaching effects on international bond markets, parts of the banking system and the struggling nation of Argentina.
The hedge funds, including one affiliated with the investment firm of the billionaire Paul E. Singer, bought a handful of bonds that Argentina’s government defaulted on early in the last decade. Their aim was to buy the debt for pennies on the dollar and then sue Argentina to press it to pay the bonds in full. A lower court judge ruled in their favor, and a three-judge panel of the United States Court of Appeals for the Second Circuit in New York upheld his decision.
The funds may not be in line for a big financial return on their high-risk bet, even after the court victory on Friday. But even if their wager never pays off, the funds’ litigation strategy is bringing important changes to the international market in which many countries borrow to finance their deficits and support their economies.
The litigation could also create a situation in which Argentina, led by President Cristina Fernández de Kirchner, chooses to default on billions of dollars of bonds, a move that would deepen the country’s economic problems. Argentina has employed prominent New York lawyers to fight its case. Mrs. Kirchner has often commented combatively on the case, calling the hedge funds “vultures.”
“This is legal history in the making,” said Arturo C. Porzecanski, a professor of international economics at the American University in Washington. “The ruling, as well as the entire Argentina litigation, is really setting precedent.”
The appeals court decision has its roots in a dark period of Argentina’s recent history. Reeling from a harsh economic slowdown, Argentina defaulted on nearly $100 billion of debt in 2001. In the years afterward, many of the country’s bondholders agreed to deals in which they received new “exchange” bonds that were worth a lot less than the original ones. Argentina has kept up with the payments on the exchange bonds since it issued them.
But some investors, known as holdouts, refused to join the exchange deals and demanded full repayment. This included Mr. Singer’s firm, Elliott Management, which has sued other developing countries to make money on defaulted bonds. In the Argentina case, it even persuaded a court in Ghana to seize an Argentine naval vessel.
The funds demanded that they be paid in full on $1.3 billion of defaulted Argentine bonds, and Judge Thomas P. Griesa of Federal District Court in New York ruled forcefully in their favor.
His ruling contained two crucial features. First, he said Argentina had to pay the holdouts on their defaulted bonds whenever it next made payments on the restructured bonds. And in a move that has few precedents, Judge Griesa came up with a way to potentially enforce his decision if Argentina chose to ignore it. He singled out the financial firms that pass the payments on the restructured bonds from the Argentine government to their holders. If these firms handled the payments, they could effectively find themselves in contempt of the court’s ruling.
Not wanting to break the law, the firms, like Bank of New York Mellon, would stop processing the bond payments. Mrs. Kirchner would then have to decide whether to pay the holdouts to clear the way for the payment-processing firms to funnel money to the holders of the exchange bonds or, in the alternative, default on the exchange bonds.
Though the appeals court sided with Judge Griesa, it delayed the enforcement of the decision while the Supreme Court decides whether to take the case.
“Today’s unanimous, well-reasoned decision appropriately condemns Argentina’s persistent violation of its obligations and its extraordinary defiance of the laws of the United States,” Theodore B. Olson, a partner at Gibson, Dunn & Crutcher, the law firm that is representing an affiliate of Elliott Management, said in a statement.
“This is another opportunity for my government to do what it should do and deal in good faith,” said Horacio Vázquez, a Buenos Aires native who leads a group of bondholders who want to be repaid in full.
Elliott bought some of its Argentine debt before the country’s 2001 default, according to a person familar with the fund’s actions.
One big question is whether the appeals court decision will disrupt the sort of debt reductions that can ease the economic burdens of some countries. Investors might be emboldened to take a tough line after seeing Elliott’s legal successes.
But the appeals court argued that this Argentina case was narrow in nature, suggesting that it may not apply in other defaults. “This case is an exceptional one with little apparent bearing on transactions that can be expected in the future,” Judge Barrington D. Parker wrote in the decision.
Legal specialists who think the Argentina case won’t have a wide effect have also noted that many bonds now have a special feature that make it much harder for hedge funds to hold out.
Still, bonds continue to have a so-called pari passu clause, from the Latin for “on equal footing,” which has been crucial in this case. The clause provided the legal basis for the courts to demand that the holdouts be paid when the holders of the exchange bonds are paid.
“Everyone who has a clause like this had better look at it very carefully,” Mitu Gulati, a law professor at Duke, said.
Perhaps the most jarring development is that the appeals court upheld the provisions that are designed to stop banks from passing on payments on the exchange bonds. The government debt market lacks an authority, like a bankruptcy court, that can sort out disputes between creditors and debtors. By effectively tying the hands of firms like Bank of New York Mellon, the United States courts could become such an enforcer.
“This is the revolution in this case,” Mr. Gulati said. “For the first time in hundreds of years of sovereign debt, a court is saying, ‘We’re going to go out there and improve the market by helping you to enforce it.’ ”
The odds of Argentina getting the Supreme Court to rule on the case do not look strong.
“On the one hand, just looking at these questions as questions of law, I don’t think the Supreme Court is likely to take it up,” Henry Weisburg, a partner at Shearman & Sterling, said. “But you do have to balance this against the fact that sovereign states do get deference from the Supreme Court.”
In Argentina, Mrs. Kirchner is likely to keep up her strong opposition to the hedge funds for the foreseeable future, which means they probably won’t get paid in full any time soon.
But political analysts are starting to doubt whether she can win the 2015 election. That could pave the way for a new president who may be more willing to settle with the holdouts.
5. ARGENTINA LOSES APPEAL OF RULING FORCING IT TO PAY BONDHOLDERS (Financial Times)
By Benedict Mander in Caracas and Robin Wigglesworth in London
August 23, 2013
Argentina on Friday lost an appeal of a US court ruling that would force it to pay $1.33bn to bondholders that rejected debt restructurings after its milestone 2001 default on nearly $100bn.
The decision represents an important victory for what Argentina disparagingly calls “vulture funds”. It also revives market fears that the South American country could be moving inexorably towards its second default in just over a decade. The dispute also has important implications for future sovereign debt restructurings.
The 2nd US Circuit Court of Appeals in New York said enforcement of the injunctions would be delayed pending resolution of an appeal to the US Supreme Court, which last year ordered Argentina to pay the so-called “holdout” bondholders. Earlier this year, Argentina asked the Supreme Court to review the case as it continues its dispute with the creditors led by Elliott, a US fund, who bought debt cheaply after the 2001 default and have been suing to collect in full.
“This will take time to resolve, and the politics could change before it is. The final chapter of this saga hasn’t been written yet,” said a lawyer with knowledge of the case.
Important midterm legislative elections will be held in Argentina on October 27, after President Cristina Fernández de Kirchner’s party suffered a major defeat in primary elections earlier this month. Ms Fernandez is now unlikely to secure the two-thirds majority needed to reform the constitution and enable her to stand for re-election when her term expires in 2015.
Observers believe that the Supreme Court is unlikely to look at the case until late September, and since it will have an impact on sovereign relations, it is possible that the court may ask the Solicitor-General for its opinion. The lawyer said that there would be “a ferocious lobbying battle” in Washington over what the Solicitor-General might say.
The price of Argentina’s bond maturing in 2033, which is affected by the ruling, fell from 66.12 cents on the US dollar before the ruling to 62.5 cents by midday in New York. The bond is very illiquid, but this equates to a yield of 14.49 per cent.
“The court did what was politically correct: uphold New York Law by ruling against Argentina but granting a stay that had not been asked pending appeal at the Supreme Court. Thus, whatever impact this may have on the market, it will be on the shoulders of the Supreme Court,” said Marcelo Etchebarne, an Argentine lawyer who has been following the case closely.
The development follows the cancellation last month of plans by the International Monetary Fund to support Argentina’s push for a US Supreme Court review of the case, after the US made clear that it would not support the move.
The IMF’s planned intervention was driven by concerns about the implications for future sovereign restructurings, although some experts argue that Argentina’s case is so unusual that there would be no knock-on effects.
Argentina’s first bond restructuring took place in 2005. In that, and a second debt swap in 2010, Argentina restructured some 93 per cent of its defaulted debt with a steep writedown.
6. DEADBEATS DOWN SOUTH (The Wall Street Journal)
24 August 2013
While President Obama was suggesting new ways for college students to avoid paying their bills this week, a federal court was sending a different message. On Friday the Second Circuit Court of Appeals ruled that a contract is still a contract, even if one party is a government. This means that President Cristina Kirchner will have to honor the promises that Argentina made to U.S. investors.
Argentina’s 2001 default on roughly $100 billion in debt was at the time the largest sovereign default in history. The spendthrift government offered creditors roughly 30 cents on the dollar in restructuring deals in 2005 and 2010. Figuring that Argentina’s left-wing populist government was unlikely to offer better terms to foreign bondholders, more than 90% of these investors accepted the offers.
But holdouts including a subsidiary of Paul Singer’s Elliott Management reasonably argued that Argentina should repay in full. Argentina ignored the holdouts and has refused to pay them a nickel of the more than $1 billion in principal and interest due on roughly $4 billion of Argentine debt. Buenos Aires began making the reduced payments only to the investors who had accepted the haircuts.
Argentina’s problem is that the bond contracts the government freely accepted specifically said that all bondholders must be treated equally. Friday marks at least the third time a U.S. court has reminded Argentina that it cannot pay some investors while stiffing others.
Along the way, the Argentine government has also tried to claim sovereign immunity under U.S. law, which would prevent U.S. investors from seizing the assets of a foreign government to enforce a contract. But U.S. judges keep reminding Argentina that it voluntarily waived that immunity in its bond contracts. No doubt Buenos Aires understood it could borrow the money at attractive rates only if it gave investors some reason to believe they might be repaid.
Friday’s ruling sends a welcome message that investors can lend to foreign governments and know that their rights will be upheld. It provides an equally helpful reminder for sovereign governments that they will be held accountable for their obligations.
While the International Monetary Fund and others predicted chaos in future loan restructurings if the holdouts won in court, sovereign bond markets shrugged off Friday’s decision. The truth is most bond deals now include collective-action clauses, so a super-majority of lenders will set the rules for everyone. That takes nothing away from the gratifying legal message that Argentina’s government can’t treat U.S. investors as contemptuously as it so often treats its own citizens.
7. COURT RULES IN DEBT DEFAULT; ARGENTINA MUST PAY FULL AMOUNT TO ONE GROUP OF INVESTORS, JUDGES DECIDE (Los Angeles Times)
By Ken Bensinger
24 August 2013
Argentina’s long slugfest with Wall Street over its sovereign debt default — the largest ever — has left the South American nation unbowed after losing another round in U.S. courts.
A federal appeals court ruled Friday that Argentina must pay a group of bond investors more than $1.3 billion, the full amount of principal and interest, if it wants to continue making discounted payments that other creditors have agreed to accept.
Argentina has publicly vowed to never pay face value on those notes, so the unanimous decision by the three-judge panel of the U.S. 2nd Circuit Court of Appeals could force a default on the country’s other debts.
However, the court stayed its ruling to allow the U.S. Supreme Court to decide whether to hear an appeal from Argentina in a related case. Yields on Argentine bonds fell slightly after the ruling, reflecting the fact that the stay at least buys more time for the country.
The heated dispute between the nation of 40 million and a group of investors led by hedge funds Elliott Management and Aurelius Capital Management has drawn wide attention in the world of international finance, where it has been called “the trial of the century.”
Argentina’s supporters, a group that includes the International Monetary Fund and France, have expressed concerns that the ruling could make it more difficult for poor countries to restructure unmanageable debt load.
Many on Wall Street, meanwhile, argue that a victory for Argentina would undermine confidence in U.S. markets and potentially shake the international bond markets.
The decision, which upholds a District Court ruling in November, “confirms that Argentina is not above the law,” said Theodore B. Olson, a lawyer who represents the investors.
He and his clients have argued that Argentina has consistently defied laws in New York State and elsewhere in its refusal to pay the old debts.
The fight was triggered by Argentina’s record default on nearly $100 billion in bonds in late 2001. Although the country was able to restructure most of that debt to pay investors at a discount, a small group holding about 7% of the total value refused to consent to the deal.
Those holdouts sued Argentina in various courts, demanding the full amount of their investment, plus interest.
Some have attempted creative measures to recover value, at one point persuading a judge in Ghana to seize an Argentine warship at port in a bid to extract a ransom.
The ship, La Libertad, was ultimately released, and the holdouts have had difficulty recovering any value on their investment. Elliott, which was not an original investor, has declined to say how much it spent on the secondary market to acquire defaulted Argentine debt.
In the 2nd Circuit ruling, Judge Barrington Parker wrote that the “decision does no more than hold Argentina to its contractual obligation of equal treatment,” and he noted that the court believed the case was unique and would not affect other debt matters.
In June, Argentina filed a separate petition asking the U.S. Supreme Court to review a lower court ruling that barred the country from making debt payments to other investors without also paying holdouts.
Critics of the ruling have argued that it will encourage investors like Elliott and Aurelius to refuse offers to restructure debts in the future.
“Today’s ruling means that these funds will more aggressively target poor countries and struggling economies,” said Eric LeCompte, executive director of Jubilee USA Network, a faith-based nonprofit group that fights global poverty.
The IMF and the U.S. Treasury have spoken out against the court decisions, even as they have criticized Argentina for its handling of the acrimonious dispute. Most recently, France, in a brief filed to the Supreme Court in July, said the lower court ruling would “threaten international financial stability.”
Investors who accepted the discount deal have taken Argentina’s side as well, arguing that an adverse ruling could hurt their interests.
That’s because Argentina’s president, Cristina Fernandez de Kirchner, has vowed to never pay the holdouts a cent more than paid to those who took the deal. And because the court ruling would require Argentina to pay the holdouts at the same time as it pays other debtors, it would probably enter into default.
Argentina has not publicly commented on Friday’s ruling.
The high court, which is not in session, has not yet said whether it will hear the petition the nation filed in June.
8. ARGENTINA LOSS BRINGS END OF DEFAULTED BOND FIGHT CLOSER (Bloomberg News)
By Bob Van Voris
August 24, 2013
Argentina lost its appeal of a ruling that would force it to pay in full holders of $1.5 billion in its defaulted debt when it makes a payment to investors who took discounted restructured bonds, leaving the unlikely prospect of a Supreme Court appeal as its last hope.
The U.S. Court of Appeals in New York said it would delay the effect of its ruling until the high court decides whether to review the case. Argentina’s restructured bonds fell after the ruling was released.
A three-judge appeals court panel, referring to the nation as “a uniquely recalcitrant debtor,” rejected Argentina’s arguments that a ruling in favor of the defaulted debt-holders, led by billionaire hedge fund manager Paul Singer’s Elliott Management Corp. and Aurelius Capital Management LP, would violate its sovereignty and expose it to a fresh financial crisis by threatening a default of the new bonds.
Argentina has vowed never to pay holders of its defaulted bonds, whom the country’s leaders have called “vultures,” and its legislature passed a law in 2005 barring payment of the defaulted bonds. Yesterday’s ruling leaves Argentina with the unlikely prospect of persuading the appeals court to overrule itself or the Supreme Court to consider the case.
Norma Madeo, spokeswoman for Argentina’s Economy Ministry, didn’t return a phone call seeking comment on the ruling.
Glossing Over
“Today’s opinion unfortunately glosses over the inequitable impact of the injunction on the exchange bondholders’ constitutionally protected property rights,” Sean O’Shea, a lawyer for holders of the restructured bonds said yesterday in a statement. “We look forward to the opportunity to present the exchange bondholders’ position to the Supreme Court.”
Argentina in 2001 defaulted on a record $95 billion of foreign debt. Holders of about 91 percent of the bonds agreed to take new exchange bonds in 2005 and 2010, at a deep discount.
A group of holdout investors had asked the appeals court to uphold rulings by U.S. District Judge Thomas Griesa in Manhattan that they said give them the ability to collect the $1.5 billion they said they’re owed.
In ruling for the holdouts, the court yesterday rejected Argentina’s predictions of economic disaster.
“What the consequences predicted by Argentina have in common is that they are speculative, hyperbolic and almost entirely of the republic’s own making,” U.S. Circuit Judge Barrington Parker wrote in yesterday’s opinion.
Deep Discount
Argentina’s restructured dollar bonds due in 2033 fell 1.64 cents to 59.66 cents on the dollar yesterday in New York after earlier rising to 62.03 cents, according to data compiled by Bloomberg. Yields on the securities climbed 0.41 percentage point to 15.07 percent. The extra yield investors demand to own Argentine bonds over U.S. Treasuries rose 0.49 percentage point to 10.72 points, according to JPMorgan Chase & Co. (JPM) data.
“I don’t think there’s any good news in this for Argentina,” said Bruce Wolfson, a lawyer with the firm Bingham McCutchen LLP who has been following the litigation. “The court apparently went down the line and affirmed all of Judge Griesa’s rulings.”
Wolfson said the odds are “very long” that the Supreme Court will agree to hear the case.
The court yesterday rejected Argentina’s arguments that a ruling against it would hamper future efforts by overwhelmed debtor nations to restructure their debt. Parker said Griesa was justified in tying payment of the defaulted bonds to the restructured debt payments because Argentina had made clear “its intention to defy any money judgment issued by this court.”
‘Persistent Violation’
Yesterday’s ruling “appropriately condemns Argentina’s persistent violation of its obligations and its extraordinary defiance of the laws of the United States and the orders of U.S. courts,” Theodore Olson, a lawyer for Elliott, said in an e-mailed statement.  “It confirms that Argentina is not above the law.”
Bank of New York Mellon Corp., the indenture trustee for Argentina’s restructured bonds, argued in the appeal that it shouldn’t be forced to halt payments to holders of the bonds if Argentina refuses to obey Griesa. The court yesterday agreed with Griesa’s ruling that BNY Mellon and other institutions involved in the restructured bond payments can’t act in concert with Argentina to violate his orders.
Argentina has spent the past decade opposing claims brought in U.S. courts by holders of the defaulted bonds.
Clinton, Bush
The case was argued before the appeals court in February. The judges on the appeals panel were Rosemary Pooler, appointed by President Bill Clinton, a Democrat; Reena Raggi and Parker, both named to the court by George W. Bush, a Republican.
Many holders of the defaulted Argentina bonds have won U.S. court rulings requiring the country to pay them. Despite those rulings, courts have generally prevented them from moving to seize the country’s assets, citing the Foreign Sovereign Immunities Act.
That law limits the ability of plaintiffs to sue foreign countries in U.S. courts. Argentina has asked the U.S. Supreme Court to review the case based in part on that law.
On Oct. 26, the appeals court upheld a ruling by Griesa that could allow Elliott Management’s NML Capital and other bondholders to collect, indirectly, by blocking the nation from paying the restructured debt without also paying the defaulted bonds.
Equal Treatment
The appeals court in October affirmed Griesa’s ruling that an equal treatment, or pari passu, clause in the original bond agreements prevents Argentina from treating defaulted bondholders less favorably than exchange bondholders. The appellate court upheld an injunction issued by Griesa that barred Argentina from paying the exchange bondholders without also paying holders of defaulted debt.
In the October ruling, the appeals court asked Griesa to explain how his orders affected third parties, including banks and payment intermediaries. It also asked Griesa to clarify the formula that would be applied to calculate payments to the holders of defaulted bonds.
“Our decision affirms a proposition essential to the integrity of the capital markets: borrowers and lenders may, under New York law, negotiate mutually agreeable terms for their transactions, but they will be held to those terms,” Parker said in his opinion yesterday.
“We believe that the interest — one widely shared in the financial community — in maintaining New York’s status as one of the foremost commercial centers is advanced by requiring debtors, including foreign debtors, to pay their debts,” he said.
The case is NML Capital Ltd. v. Republic of Argentina, 12-00105, U.S. Court of Appeals for the Second Circuit (New York).
9. ARGENTINE BONDS RISE AS U.S. COURT DELAYS ORDER TO PAY HOLDOUTS (Bloomberg News)
By Katia Porzecanski and Camila Russo
August 23, 2013
Argentina’s overseas bonds gained after a U.S. appeals court said it will delay the effects of a ruling that forces the nation to pay holdout creditors from its 2001 default in full pending a decision by the Supreme Court.
Argentina’s restructured dollar bonds due in 2033 gained 1.1 cent to 64.28 cents on the dollar at 10:49 a.m. in New York, according to data compiled by Bloomberg. Yields on the securities fell 0.25 percentage point to 13.97 percent.
The court rejected Argentina’s appeal of a ruling that would force it to pay holders of $1.5 billion in defaulted bonds, led by hedge fund Elliott Management Corp., when it makes payments on its restructured debt. The effects of the ruling will be delayed while Argentina, which has vowed to never repay holders of defaulted bonds in full, asks the U.S. Supreme Court to review the case, and until the high court decides to accept the request.
“Prices held because the stay means that even if the decision was negative for Argentina things will remain as they are until the Supreme Court decides whether it’ll take the case,” Jorge Piedrahita, chief executive officer of Torino Capital LLC, said by telephone from New York.“It means that the next bond payments are safe.”
The extra yield investors demand to hold Argentine debt over U.S. Treasuries fell 14 basis points to 1,009 basis points, according to JPMorgan Chase & Co.’s Global EMBI Diversified index.
Argentina in 2001 defaulted on a record $95 billion of foreign debt. Holders of about 91 percent of the bonds agreed to take new exchange bonds in 2005 and 2010, at a deep discount.
Argentina argued that a ruling in the defaulted bondholders’ favor would violate its sovereignty and expose it to a new financial crisis. Bank of New York Mellon Corp., the indenture trustee for restructured bonds, said it shouldn’t be forced to halt payments to holders of those bonds if Argentina refused to comply with a court order to pay the defaulted bonds.
10. ARGENTINA SAYS TO CONTINUE PAYING DEBTS ON SAME TERMS:TELAM (Reuters News)
By Brad Haynes
August 25, 2013
(Reuters) – Argentina will continue paying bondholders on the same terms, its economy minister told state news agency Telam on Saturday, after losing an appeal in its legal battle with creditors who rejected past restructurings of the country’s defaulted debt.
The 2nd U.S. Circuit Court of Appeals upheld a judge’s order on Friday requiring Argentina pay $1.33 billion to hedge funds still fighting the country over its record sovereign debt default more than a decade ago.
“We’re going to keep paying as we have until now, on the same terms,” Economy Minister Hernan Lorenzino told Telam, calling the court ruling “an attempt to bring the country back to 2001.”
The appeals court held off enacting its decision while the U.S. Supreme Court weighs whether to take up the case, bringing short-term relief to investors concerned about another default.
The 93 percent of bondholders who renegotiated debts after Argentina’s $100 billion default, accepting less than 30 cents on the dollar, worry the refusal to pay holdouts in the face of court orders could freeze payment on restructured bonds as well.
Dissident bondholders led by Aurelius Capital Management and NML Capital Ltd, a unit of Paul Singer’s Elliott Management Corp, are demanding payment in full. They have argued that Argentina can’t deny them their due while paying investors who agreed to restructurings in 2005 and 2010.
11. ARGENTINA LOSES APPEAL IN BATTLE WITH HOLDOUTS, ORDER STAYED PENDING US SUPREME COURT RESOLUTION (Business News Americas)
23 August 2013
The US second circuit court of appeals has rejected Argentina’s appeal against judge Thomas Griesa’s order at the US southern district court of New York from October 26, 2012, and upheld the ratable formula decision enjoining BNY Mellon and other third parties.
At the same time the court stayed Griesa’s order giving time for Argentina to submit a new writ of certiorari (petition to be heard) to the US supreme court.
This latest decision by the US court in a legal battle between hedge funds led by NML Capital, a unit of Elliott Management, and Argentina has continued for over a decade following the 2001 financial crisis in the country, and now looks set to continue into 2014.
The appeals court held that “by defaulting on the bonds, enacting legislation specifically forbidding future payment on them, and continuing to pay interest on subsequently issued debt, Argentina breached its promise of equal treatment.”
The appeals court criticized Argentina’s repeated announcements of their intentions to defy any rulings by the US courts, but stated that “in view of the nature of the issues presented, we will stay enforcement of the injunctions pending resolution of a timely petition to the Supreme Court for a writ of certiorari.”
Furthermore, the court rejected arguments that its decision will have an adverse impact on New York’s status as a financial center, adding “we do not believe the outcome of this case threatens to steer bond issuers away from the New York marketplace.”
“On the contrary,” added the court, “our decision affirms a proposition essential to the integrity of the capital markets: borrowers and lenders may, under New York law, negotiate mutually agreeable terms for their transactions, but they will be held to those terms. We believe that the interest – one widely shared in the financial community – in maintaining New York’s status as one of the foremost commercial centers is advanced by requiring debtors, including foreign debtors, to pay their debts.”
In a response to questions from BNamericas, Elliott Management’s lawyer at law firm Gibson Dunn, Theodore B. Olson, commented, “Today’s unanimous, well-reasoned decision appropriately condemns Argentina’s persistent violation of its obligations and its extraordinary defiance of the laws of the United States and the orders of U.S. courts. It confirms that Argentina is not above the law.”
However, a statement from the Exchange Bondholders Group and Gramercy Funds Management lamented the opinion of the court of appeal.
“Today’s opinion unfortunately glosses over the inequitable impact of the injunction on the Exchange Bondholders’ constitutionally protected property rights,” said Sean O’Shea of O’Shea Partners, co-counsel with Boies, Schiller & Flexner LLP.
The statement continued, “We look forward to the opportunity to present the Exchange Bondholders’ position to the supreme court.”
According to Henry Weisburg of law firm Shearman & Sterling, the decision was in line with his firm’s expectations.
“We need to run some numbers but it is almost certain that the injunction will not take effect this year and there will be a Cert petition in due course and then we will find out in the first quarter of next year probably whether Cert will be granted, which again I think is unlikely,” added Weisburg.
In summary, a decision on the current pending certiorari regarding the reach of the foreign sovereign immunity act (FSIA) is likely to come in October of this year. A new certiorari petition is now expected with respect to the issues decided today, meaning the legal machine will continue rolling, with no default as yet.
12. ARGENTINA LOSES U.S. APPEAL IN $1.33 BILLION BONDHOLDER FIGHT (HedgeWorld News)
23 August 2013
NEW YORK (Reuters)—Argentina on Friday [Aug. 23] lost its appeal of a U.S. judge’s order requiring that it pay $1.33 billion to bondholders who refused to participate in two debt restructurings after the country’s $100 billion default more than a decade ago.
But the 2nd U.S. Circuit Court of Appeals in New York delayed implementing the decision pending a ruling by the U.S. Supreme Court.
The appeals court’s decision marked a major victory for the so-called “holdout” bondholders, led by NML Capital Ltd., a unit of billionaire hedge fund manager Paul Singer’s Elliott Management Corp., and Aurelius Capital Management.
U.S. Circuit Judge Barrington Parker, writing for the three-judge panel, said the court believed “it is equitable for one creditor to receive what it bargained for, and is therefore entitled to, even if other creditors, when receiving what they bargained for, do not receive the same thing.”
“Because the district court’s decision does no more than hold Argentina to its contractual obligation of equal treatment, we see no abuse of discretion,” he added.
The appellate ruling upheld a November 2012 decision that required Argentina to pay the money into a court-controlled escrow account by the time of its next interest payment to the bondholders who agreed to swap their debt in 2005 and 2010.
Dissident bondholders have long argued that Buenos Aires continues to defy U.S. law by not paying them in full. Argentina has said that if it is forced to pay the dissidents, then future sovereign restructurings would be impossible to hammer out.
Argentina has called holdouts like NML and Aurelius “vultures.” About 93 percent of the country’s bonds were restructured, with creditors receiving 25 cents to 29 cents on the dollar.
In October 2012, the 2nd Circuit said Argentina violated an equal treatment clause in the contracts governing its bonds.
In November, U.S. District Judge Thomas Griesa ordered Argentina to pay $1.33 billion owed to the holdout bondholders into an escrow account before making its next interest payment to creditors who participated in the restructurings.
The case is NML Capital Ltd. et al v. Republic of Argentina, case No. 12-105, in the 2nd U.S. Circuit Court of Appeals.
13. ATFA WELCOMES SECOND CIRCUIT RULING IN ARGENTINA DEBT CASE (Business Wire)
23 August 2013
Ruling clears way for fair resolution of Argentina’s debt obligations to U.S. citizens
WASHINGTON–(BUSINESS WIRE)–August 23, 2013–   The American Task Force Argentina (ATFA) welcomes a ruling from the U.S. Court of Appeals for the Second Circuit that upholds the rule of law and reinforces the principle that the law applies equally to all parties that submit to the judgment of U.S. courts.
Regarding the Court’s ruling, ATFA Executive Director Robert Raben made the following statement:
“Today’s unanimous, well-reasoned decision is a victory for the rule of law and the enforcement of contracts in the United States.”
“In order to raise billions of dollars at inexpensive rates in the U.S. financial markets, Argentina promised in its bond contract to submit to the jurisdiction of U.S. courts, adhere to New York law and waive its sovereign immunity. Since defaulting on those bonds in 2001, Argentina has ignored those promises, waged a vicious campaign against its creditors, and resisted every attempt by creditors to engage in good-faith negotiations. ATFA hopes that Argentina will see today’s ruling as motivation to resolve its financial obligations through good-faith negotiations and discontinue its defiance of court judgments and the rule of law.”
The Second Circuit’s decision directly addressed Argentina’s uniquely defiant and disorderly treatment of its unpaid creditors and U.S. courts. The decision cited Argentina’s threats to pay “not one dollar” to its unpaid creditors and to “not voluntarily obey” the Court’s orders, despite being fully able to pay. “It is within this context that we review the amended injunctions for abuse of discretion and, finding none, we affirm,” the Court wrote.
Importantly, the Court rejected Argentina’s claims that upholding the lower court’s orders would force it to default on its current debt. The Court cited the lower court’s finding that Argentina “has the financial wherewithal” to pay both holders of its current debt and holders of its defaulted debt. The Court rightly decided that it was “unwilling to permit Argentina’s threats to punish [holders of its current debt] to dictate the availability or terms of relief [available to holders of its defaulted debt].”
The Court also rejected Argentina’s claims that upholding the lower court’s orders would have a negative impact on future sovereign restructurings. The Court called these claims, “speculative, hyperbolic, and almost entirely of the Republic’s own making.” The Court called this case “an exceptional one with little apparent bearing on transactions that can be expected in the future.”
In fact, this ruling should serve to increase global economic stability by discouraging sovereigns from attempting to follow what the ratings agency Moody’s called Argentina’s “unique[ly] unilateral and coercive approach to debt restructuring.”
The Second Circuit appeared to agree, observing that “cases like this one are unlikely to occur in the future because Argentina has been a uniquely recalcitrant debtor,” among other reasons.
Today, ATFA renews its calls for Argentina to sit down with its creditors and reach a fair resolution of its defaulted debt.
American Task Force Argentina (ATFA) | 888-662-2382 | media@atfa.org | SOURCE: American Task Force Argentina (ATFA)
14. FACTBOX – ARGENTINA’S UPCOMING PAYMENTS ON FOREIGN-CURRENCY BONDS (Reuters News)
23 August 2013
BUENOS AIRES, Aug 23 (Reuters) – Argentina on Friday lost its appeal of a U.S. judge’s order requiring that it pay $1.33 billion to bondholders who refused to participate in two debt restructurings after the country’s $100 billion default more than a decade ago. The Second U.S. Circuit Court of Appeals put enforcement of injunctions against Argentina on hold pending resolution of the country’s appeal to the U.S. Supreme Court, delaying the specter of a possible default. The following is a list of interest and amortization payments coming due in the remainder of 2013 on Argentina’s foreign-currency bonds, according to Argentine data. All amounts are in dollars unless otherwise specified.
     
BONDS GOVERNED EITHER BY NEW YORK OR ARGENTINE LOCAL LAW*
           Next payment due         Amount             Maturity
                                    Outstanding**
 Par         Sep 30      $83.68 mln      $5.394 bln    Dec 2038
 Discount    Dec 31      $302.39 mln
    BONDS GOVERNED BY NEW YORK LAW
            Next payment due
Global 17   Dec 2      $42.25 mln
    BONDS GOVERNED BY BRITISH LAW
             Next payment due            Amount       Maturity
                                         Outstanding**
 Par         Sep 30    73.15 mln euros   $8.188 bln   Dec 2038
 Discount    Dec 31   151.94 mln euros
    BONDS GOVERNED BY JAPANESE LAW
             Next payment due             Amount      Maturity
                                          Outstanding**
 Par         Sep 30      48.70 mln yen    $273 mln    Dec 2038
 Discount    Dec 31     145.45 mln yen
    BONDS GOVERNED BY ARGENTINE LAW
               Next payment due           Amount       Maturity
                                          Outstanding**
 Bonar VII     Sep 12     $2.070 bln      $2.000 bln   Sep 2013
 Bonar 2019    Sep 15     $43.26 mln        $961 mln   Mar 2019
 Par           Sep 30       **            $1.301 bln   Dec 2038
 Boden 2015    Oct 03    $203.62 mln      $5.818 bln   Oct 2015
 Bonar X       Oct 17    $223.92 mln      $6.398 bln   Apr 2017
 Bonar 2018    Nov 29    $151.85 mln      $3.374 bln   Nov 2018
 Discount      Dec 31       **
  Source: Argentine Economy Ministry and the Argentine Institute
of Capital Markets
   *The Argentine Economy Ministry data does not distinguish
between how much of these dollar-denominated Par and Discounts
are governed by either New York or Argentine law.
   ** Amount outstanding as of June 30, 2012
15. ARGENTINE MINISTER SAYS WON’T CHANGE PLANS TO PAY HOLDOUT CREDITORS (Dow Jones Global Equities News)
By Taos Turner
25 August 2013
BUENOS AIRES–Argentine Economy Minister Hernan Lorenzino on Sunday reaffirmed the government’s position that it won’t pay so-called holdout creditors more than it pays other investors who accepted earlier debt restructuring.
“That policy is not going to change,” Mr. Lorenzino said in an interview on a state-run television program.
The comments come two days after a U.S. appeals court ruled in favor of holdout creditors and their request that the Argentine government pay them the full value of bonds that Argentina defaulted on over a decade ago.
The U.S. Second Circuit Court of Appeals in New York ruled that if Argentina keeps paying creditors who accepted a discounted restructuring offer, then it also must pay a group of holdout bondholders 100% of the roughly $1.33 billion they are owed in principal and accrued interest.
Mr. Lorenzino said the government will continue to honor its obligations to those who accepted the terms of the restructuring but that it will not pay holdout investors “anything distinct” from that.
While the appeals court ruled against Argentina, it delayed implementation of its ruling until the U.S. Supreme Court decides whether to review the case.
Argentina’s more than decade-long legal battle with creditors stems from its decision to stop paying about $100 billion of debt in 2001. The country later restructured about 93% of that debt by offering investors 33 cents on the dollar.
Holdout creditors, which include Elliott Management Corp.’s NML Capital Ltd. and Aurelius Capital, have argued that Argentina has the money to pay its debts but chooses not to do so.
16. ARGENTINA’S FERNÁNDEZ COULD TURN TO TAX CUTS, CABINET CHANGES TO BOOST POPULARITY (Business News Americas)
23 August 2013
Argentina’s President Cristina Fernández is likely to lower income taxes and may also undertake a cabinet reshuffle to boost her government’s popularity ahead of the mid-term congressional elections in October as well as the presidential elections in 2015, said Barclays Capital in a research note.
Fernández on Wednesday (Aug 21) held a meeting with the country’s main economic stakeholders, including unions, industrialists and bankers, and earlier had delivered a televised speech.
“In our opinion, the two events support our view that the administration is seeking to shift to policies aimed at stabilizing the economy (reserves, growth and inflation) in the next two years to pave the way for October 2015 presidential elections,” said Barclays.
During the meeting, Fernández had confirmed that she possessed the “political will” to reduce income taxes, but raised doubts over how such a measure would be financed. Taxing capital gains from stock trading and increasing taxation on local banks were two options that were mentioned.
Barclays said that it sees a reduction in income taxes as “extremely likely” before the congressional elections on October 27 given the positive impact it would have on the middle class. Such a move would also ease future negotiations with the unions – which are critical to contain Argentina’s high inflation – and take away some of the political opposition’s firepower.
The congressional primaries that Argentina held on August 11 turned out to be a major defeat for Fernández and her ruling party Frente para la Victoria (FPV), which only obtained 26.3% of the national vote and lost ground in several key provinces.
As a confidence boost, Barclays believes that Fernández could also make trade minister Guillermo Moreno retire or reduce his responsibilities “given that he is widely perceived as out of step with the much-needed changes in economic policies.”
“In our view, the most likely scenario is one of political change in October 2015. Two years is a long time and the president seems to agree that the economy needs some fixes,” Barclays said, while concluding that “Should the authorities follow through and walk the way they are starting to talk, this should mean lower net outflows on the external front, more growth and less likelihood of union unrest down the road.”
 
17. ARGENTINA BANS FOUR U.K. OIL FIRMS  (Dow Jones Top News & Commentary)
By Taos Turner
23 August 2013
Argentina has banned four London-based oil companies from doing business in the South American country for 20 years, saying the firms broke Argentine law by operating near the U.K.-controlled Falkland Islands.
Argentina’s government accused the companies of developing oil and gas resources near the islands without its permission. Argentina claims sovereignty over the islands and refers to them as Las Malvinas.
The ban, which was published in a series of presidential decrees Friday, applies to Borders & Southern Petroleum PLC (BOR.LN), Desire Petroleum PLC (DES.LN), Argos Resources Ltd. (ARG.LN) and Falkland Oil & Gas Ltd. (FOGL.LN).
None of the firms is thought to be engaged in any significant business activities in Argentina, though the companies couldn’t be reached immediately for comment.
In recent years, Argentine President Cristina Kirchner has pressed Argentina’s claims to ownership of the islands, which energy-industry analysts say may be home to abundant oil and gas reserves.
The islands in the South Atlantic have been under British control since the 1830s, when the U.K. displaced a precarious Argentine settlement. Argentina has long claimed that the islands still belong to it.
In April 1982, Argentina’s military government invaded the islands. The U.K. took back the archipelago after a 74-day war in which 649 Argentine and 258 U.K. soldiers died.
Relations between Argentina and the U.K. worsened notably in 2010, when U.K.-listed oil companies began exploring for oil and gas in waters surrounding the islands.
In 2011, at Argentina’s urging, countries belonging to the South American customs union, known as Mercosur, said they would block ships flying flags from the Falklands from dropping anchor in their ports.
Last year, tensions rose again when Argentina’s government urged local companies to stop importing goods from the U.K. The Argentine government also said last year it would pursue criminal and civil charges against oil-rig drillers, services companies and even banks that offered any type of financial analysis or assistance to firms operating near the islands.
Earlier this week tensions escalated amid media reports that Argentina’s ambassador to the U.K., Alicia Castro, called British Prime Minister David Cameron “dumb” and said he had dealt “foolishly” with the dispute over the islands. She later said her comments were taken out of context and that she hadn’t meant to offend the prime minister.
The presidential decrees against the oil companies also apply to individuals who have worked with companies involved in commercial activity near the islands. Any person deemed guilty of breaking related Argentine law could be banned from working in Argentina for between five and 20 years.
18. ARGENTINA BANS FOUR COMPANIES FROM ITS BORDERS FOR FALKLANDS WORK (Platts Commodity News)
By Charles Newbery
23 August 2013
Buenos Aires (Platts)–23Aug2013/344 pm EDT/1944 GMT   Argentina’s government said Friday it had banned four UK-based companies from operating within its borders for 20 years because they failed to get its permission before drilling in contested waters around the Falkland Islands in the South Atlantic.
The banned companies are Argus Resources, Borders and Southern Petroleum, Desire Petroleum and Falkland Oil and Gas, the Energy Secretariat said in a statement.
The companies drilled for oil and gas in areas around the Falklands “without authorization issued by the competent authorities” of Argentina, a violation of national law, it said.
Argentina argues that the Falkland Islands and the waters around it are part of its continental shelf.
The agency said that it had warned the companies of pending administrative, court and legal action. It added that the companies have 10 days to present their defense against the ban.
Argentina argues the four firms and other UK-based companies are carrying out exploration in the island chain’s waters in violation of Argentinian and international law and a United Nations resolution barring such activities while the question of sovereignty remains unresolved.
Argentina and Britain fought a brief war over the islands in 1982 and relations have remained tense on the sovereignty issue since then, with no talks on the issue taking place.
The situation worsened in 2010 when UK companies started drilling in waters near the islands, which Argentina calls the Islas Malvinas.
Premier Oil, another British firm operating in the contested waters, said in July 2012 that its Sea Lion prospect has the potential to produce 50,000 b/d of crude.
Most of the investment by the UK companies has been in exploring areas around the islands through seismic surveys and exploratory drilling, with Sea Lion showing potential for commercial production.
Premier Oil, which entered the prospect by buying a 60% stake from Rockhopper Exploration in 2012, plans to drill three exploratory wells by the end of 2014 or in early 2015.
Falkland Oil and Gas plans to process seismic data by the end of 2013 to determine where new well locations should be after drilling two in 2012 that found potential in the South and East Falkland Basins.
Desire is seeking investors for further exploratory and appraisal drilling on in the North Falkland Basin in late 2014. Argos is also targeting the North Falkland Basin, where it has identified potential resources of 3.1 billion to 10.4 billion barrels of hydrocarbons.
Borders & Southern is focused on the South Falkland Basin, where it has drilled two exploratory wells and one gas condensate discovery that shows potential for a 200 million barrel development.
The Falkland Islands is a UK self-governing overseas territory. In a March referendum, residents of the Falklands voted to remain British. The British government argues that their position should be respected.

==============================================================

TUESDAY, AUG 20TH

 
 
 
 
 
 
 
 
 
 
 
 
 
 
1. ARGENTINA REOPENS DEBT SWAP FOR SECOND TIME (The Wall Street Journal)
By Taos Turner
August 26, 2013
The decision follows an adverse ruling in a New York court last week.
BUENOS AIRES—Argentina’s government will reopen a 2005 debt swap for a second time after an adverse ruling in a New York court last week.
The move, unveiled by President Cristina Kirchner Monday, comes as the government deals with the fallout from a U.S. court decision last week that ordered Argentina to pay a group of so-called holdout bondholders 100% of the roughly $1.33 billion they are owed in principal and accrued interest.
The Kirchner administration has refused to pay the holdouts, saying they don’t deserve 100% of what they are owed under U.S. law. Argentina defaulted on its debt at the end of 2001, and in 2005 and 2010 it offered to pay bondholders only a third of what they were owed on the defaulted debt.
Though 93% of bondholders eventually accepted Argentina’s terms, others, such as the group of holdouts who were favored in last week’s decision, held out hope for a better offer.
The offer never came, and Mrs. Kirchner indicated Monday that her government wouldn’t comply with the court order, even if it is upheld by the U.S. Supreme Court.
The move to reopen the debt-restructuring process for a second time appears aimed at ensuring that Argentine payments to overseas bondholders don’t get embargoed by the U.S. court.
Argentina will invite investors holding foreign-law bonds to swap them for new debt that would be paid under local legislation in Argentina.
Offering bondholders the option of collecting on their debt in Argentina could avoid that risk.
“This shows our profound commitment to paying our debt to bondholders,” Mrs. Kirchner said in a televised speech.
Mrs. Kirchner said her government is deeply committed to paying its debt and that the U.S. appeals-court decision “is a bit unfair to Argentina.”
“The government is a serial payer but not a serial debtor,” Mrs. Kirchner said, putting a twist on the notion that Argentina is a “serial defaulter.”
By reopening the debt swap, Argentina is also giving the 7% of bondholders who didn’t participate in the previous debt restructurings an opportunity to do so now.
While the appeals court ruled against Argentina, it delayed implementation of its decision until the U.S. Supreme Court can decide whether to review the case.
“The decision of the U.S. Supreme Court will affect not only Argentina but the entire financial world,” Mrs. Kirchner said, indicating that such a ruling could make it harder for other countries to restructure their debts in the future.
2. ARGENTINE PRESIDENT, SPURNING US COURTS, SAYS HOLDERS OF BAD DEBT CAN COLLECT IN BUENOS AIRES (The Washington Post)
By Michael Warren
August 26, 2013
BUENOS AIRES, Argentina — Argentina’s president revealed Monday night how she’ll try to defy U.S. courts that have ruled against her government in a decade-long, billion-dollar legal fight over debts that have been unpaid since the country’s world-record, $100 billion default.
Rather than comply with Friday’s unanimous ruling ordering her government to pay $1.4 billion in cash to a group of plaintiffs she calls “vulture funds,” President Cristina Fernandez is proposing another debt swap: offering new bonds to be paid in dollars in Buenos Aires to anyone still holding defaulted debt.
Fernandez made the announcement in a surprise address to the nation, saying the U.S. federal appellate judges were unfair to label Argentina a deadbeat. She said Argentina has made $173 billion in debt payments since 2003 and will pay $2 billion more on Sept. 12.
“Rather than ‘recalcitrant debtors,’ we are serial payers,” she said.
The proposal she is sending to congress Tuesday is her long-awaited “Plan B” for answering court rulings requiring Argentina to first pay cash to a small fraction of “holdouts” who sued rather than join the more than 92 percent of bondholders who provided Argentina with billions of dollars in debt relief in 2005 and 2010. Those who joined in the debt swap have been paid ever since.
Friday’s court ruling seemed to leave Fernandez with no wiggle room: If she keeps refusing to pay the holdouts, Argentina’s payments to those who accepted previous swaps will be embargoed by the U.S. financial system, forcing the country into another default.
Argentina has filed a long-shot appeal to the U.S. Supreme Court, but meanwhile Fernandez is proposing that any bondholders who haven’t been paid, or who fear that their current payments will get held up, can trade their New York-law bonds for new bonds whose contracts will be enforced under Argentine law.
“We can’t keep the country under a ‘Sword of Damocles,’” she said. “The first decision we made is to ask God to shine down on the United States Supreme Court.”
“We’ve made two more decisions: Tomorrow we’re going to send a proposed law to Congress … to open for the third time the debt swap, for the 7 percent that haven’t entered. We want to face up to the promises of Argentina.”
She said bondholders who have worked with Argentina will be able to trade their current bonds for new ones under the same payment terms, but paid in Argentina rather than New York.
“Those who have Argentine bonds, we are going to replace these with similar bonds, in foreign currency, and under the same terms, but paid here in Argentina,” she said.
Analysts have predicted that any attempt to pay bondholders in Buenos Aires rather than comply with the U.S. courts will fail, reasoning that few bondholders who now can turn to courts in New York in any dispute with Argentina’s government will be willing to risk a change that makes Argentine courts the final arbiter.
3. ARGENTINA AIRLINE UNIONS WARN THEY WILL GO ON STRIKE IF LAN EVICTED FROM CAPITAL’S AIRPORT (The Washington Post)
August 26, 2013
BUENOS AIRES, Argentina — Argentine airline unions are threatening to strike Thursday if the government goes ahead with plans to evict the local subsidiary of Latin America’s biggest carrier from its Buenos Aires airport hangar.
Regulators have given LATAM’s LAN Argentina until month’s end to vacate its hangar at Aeroparque airport in downtown Buenos Aires. LATAM says Argentina’s government wants to undermine the company’s competitive advantage against money-losing state-owned Aerolineas Argentinas.
Unions say more than 1,000 LAN employees could lose their jobs if the eviction goes through. The Argentine APTA and Atcpea unions, whose members include airplane technicians, flight attendants and ground crews, warned on Monday that its members will strike on the eviction deadline.
“We’ve determined a nationwide stoppage for all airlines — Aerolineas Argentinas, LAN, Andes and Sol — that will affect international flights,” APTA union leader Ricardo Cirielli told reporters, listing the airlines that operate at Aeroparque.
Aerolineas Argentinas flies to most of the country’s cities and covers international routes including Madrid, Barcelona, Miami and New York. Sol has flights within Argentina and Uruguay, while Andes has cargo-only routes.
LAN now has 10 planes serving 14 Argentine cities. It says it will have to stop flying domestically in Argentina without the maintenance hangar. The company pays $20,000 a month in rent on the building under a contract that expires in 2013.
Aerolineas also has expanded its service, but continues to bleed money despite government subsidies that keep most of its ticket prices below what LAN charges. Many passengers prefer LAN because it has a better on-time record and has fewer delays due to strikes and other labor problems.
Flag-waving union members blocked the road leading to Aeroparque on Monday.
LAN Argentina, meanwhile, went to court to try to block the regulator’s decision.
“We want to keep flying in Argentina and that’s why we need our hangar in Aeroparque,” LAN said in a statement published by local newspapers.
The government says the eviction won’t affect the company’s services and LAN will be allowed to “continue its operations to and from the airport without risking operational security or jobs.”
The conflict with Argentina’s government is the latest setback for LATAM, which was formed when Chile’s LAN took over Brazil’s TAM airlines last year.
The company announced a quarterly loss of $330 million last week due largely to currency fluctuations in Brazil, and it was fined $1 million by Canada in a price-fixing case involving South American cargo shipments.
LATAM’s shares have lost more than half their value in the year since the merger.
4. ARGENTINA TO REOPEN DEBT SWAP AFTER ADVERSE U.S. COURT RULING (Bloomberg News)
By Eliana Raszewski and Camila Russo
August  26, 2013
Argentina will send a bill to Congress tomorrow to reopen a debt restructuring for those creditors who haven’t accepted previous swaps after the nation’s 2001 default, said President Cristina Fernandez de Kirchner.
The new swap, if approved by Congress, will offer holders of defaulted debt the same securities issued in previous restructurings in 2005 and 2010, Fernandez said in a nationally televised speech. She also said that holders of restructured bonds, who accepted discounts of as much as 70 percent, will be able to swap them into securities governed by Argentine law in a bid to prevent payment disruptions from a U.S. court ruling in favor of the holdouts.
The announcement came after a three-judge panel in a U.S. appeals court rejected Argentina’s attempt at reverting a ruling in favor of the defaulted debt holders, led by billionaire hedge fund manager Paul Singer’s Elliott Management Corp. and Aurelius Capital Management LP. Argentina argued that forcing it to pay holdouts at the expense of investors of restructured debt would violate its sovereignty and expose it to a fresh financial crisis by receiving billions of dollars in new claims. Fernandez rejected the court’s titling of the country as “a uniquely recalcitrant debtor.”
“Instead of recalcitrant debtors, we are serial payers,” Fernandez, 60, said in her speech, adding that the country has paid about $174 billion in debt since 2003. “The ruling ignored the country’s accords reached with 93 percent of holders of defaulted debt.”
With the effect of the ruling delayed until the U.S. Supreme Court decides whether to hear the case, a resolution may not come until the first quarter of 2014, according to law firm Shearman & Sterling LLP.
“We beg God to illuminate the U.S. Supreme Court,” Fernandez said.
The changing of jurisdiction on performing debt governed by international law will be voluntary and depending on the nation’s request for the Supreme Court to take their case, a government official, who isn’t authorized to speak publicly about the plans, said in an interview. The re-opening of the swap is intended to show the Supreme Court the nation’s willingness to pay, he said.
5. ARGENTINE IMPORTERS SAY PERMITS BEING DELAYED TO SHIELD RESERVES (Bloomberg News)
By Eliana Raszewski
August  26, 2013
Argentina is extending the time it takes to approve import permits in an effort to shore up central bank reserves that have dwindled to a six-year low, according to Argentina’s biggest importers’ association.
“Imports have become the variable of adjustment of this model of currency restrictions,” Miguel Ponce, an official at Cira, which represents companies that account for 80 percent of the country’s imports, said in a telephone interview from Buenos Aires. “The most affected by these delays are workers, small and medium-sized companies and industrial production, as the lack of parts and machinery is causing a decline in some industries.”
Argentina is blocking imports from Brazil, its biggest trading partner, Valor Economico reported today. President Cristina Fernandez de Kirchner started tightening import restrictions in 2011 to protect reserves after capital outflows jumped. She also banned most dollar purchases. Her efforts didn’t prevent central bank holdings from dropping to $37 billion on Aug. 23, the lowest since April 2007.
Industrial output expanded 2.8 percent in July from a year earlier, the slowest growth since April, according to the national statistics agency.
A weakening real, which has tumbled 14.1 percent against the dollar this year, is making Argentine exports to Brazil less competitive, according to Cristiano Rattazzi, president of Fiat Auto Argentina SA. Argentina’s peso has fallen 12.7 percent in the same period.
“A real at 2.4 per dollar is worrisome for Argentina” Rattazzi told reporters in Buenos Aires on Aug. 22. “A year ago, there were lots of investors here who were interested in auto part production. Today you won’t find as many.”
6. LAN ARGENTINA APPEALS EVICTION FROM AEROPARQUE HANGAR (Reuters News)
August 26, 2013
Aug 26 (Reuters) – Santiago-based LATAM Airlines, the biggest carrier in Latin America, went to court in Argentina on Monday to appeal its eviction from a hangar at a downtown Buenos Aires airport.
A spokesman for the airline said local unit LAN Argentina had filed the court challenge, but declined further comment on the case. The standoff has raised tensions with neighboring Chile, home of the airline’s major shareholders, which once included billionaire Chilean President Sebastian Pinera.
Two unions for Argentine airline employees pledged a strike on Thursday affecting flights throughout the country, as they blamed the government’s decision for risking some 1,500 jobs.
Argentina’s airport regulator said last Tuesday that LAN had 10 days to vacate the hangar at the Aeroparque Jorge Newbery because it was not a state airline. LAN is the main competitor of Argentina’s flagship carrier, Aerolineas Argentinas, which was nationalized in 2008.
LATAM, formed in a merger last year between Chile’s LAN and Brazil’s TAM, has said the decision puts the airline’s domestic Argentine operations at risk.
The government’s move has sparked a flurry of diplomatic activity between the South American neighbors and created another headache for LATAM, which is already struggling with fallout from Brazil’s weakening economy.
7. ARGENTINA OFFERS BOND SWAP TO SKIRT U.S. COURT RULINGS (Reuters News)
By Alejandro Lifschitz and Brad Haynes
27 August 2013
BUENOS AIRES, Aug 26 (Reuters) – Argentina’s government is proposing a voluntary bond swap on its foreign debt, shifting payments to Buenos Aires, if it cannot overturn U.S. court rulings that threaten to trigger its second debt crisis in just over a decade.
The bond swap would allow Argentina to keep paying the creditors who agreed to restructure the country’s sovereign debt after a record $100 billion default in 2002, President Cristina Fernandez said in a televised address on Monday night.
Investors in international markets would have the option to swap their foreign debt for Argentine bonds if ongoing appeals of the U.S. court rulings are rejected, a government source told Reuters on condition of anonymity.
Argentina on Friday lost its appeal of a U.S. court order requiring it to pay $1.33 billion to “holdout” hedge funds that refused steep discounts following the 2002 default.
If Argentina refuses to pay off the holdouts in full, the ruling could block payment overseas to the 93 percent of bondholders who accepted restructurings in 2005 and 2010 that give them less than 30 cents on the dollar.
In a direct plea to the U.S. Supreme Court, Fernandez urged justices to overturn the decision, which she warned could undermine future sovereign debt restructurings.
She also proposed a third restructuring of Argentina’s defaulted debt, offering holdouts another opportunity at the terms offered in the 2010 bond swap.
Her more conciliatory tone contrasted sharply with her past denunciations of the so-called “vulture funds” she accuses of trying to bankrupt the country. That defiant attitude had drawn the ire of judges in the United States, who fault Argentina for a lack of good faith negotiation with creditors.
Still, Fernandez insisted that her government was meeting its obligations and rejected one appeals court judge’s description of Argentina as a “uniquely recalcitrant debtor.”
“I would say that rather than ‘recalcitrant debtors’ we are serial payers,” she said. “Just as the country entered the Guinness (World Records) for the biggest sovereign debt default, we should also be in the Guinness among the countries that have most fulfilled our obligations over the past 10 years.”
In the 2005 and 2010 restructurings, Argentina issued international debt under New York, British and Japanese law.
But Fernandez’s proposal of a new bond swap raised questions about whether investors would be interested in taking Argentine bonds in lieu of foreign debt, given strict currency and capital controls that the left-leaning Fernandez government has imposed.
“Changing the location of the payments to Buenos Aires is going to be extremely complicated amid the currency controls,” said Jorge Todesca, a former deputy economy minister who is now head of the Finsoport economic consultancy.
“Argentina will never be able to issue public debt abroad if it continues trying to dodge a settlement,” he said. “We can assume Argentina will continue to be financially isolated from the rest of the world as long as this goes on.”
The president said she would send a bill to Argentina’s Congress on Tuesday in order to offer remaining holdouts the same terms as the restructured debts.
“I expect some holdouts to take this opportunity and tender their defaulted debt,” said Alberto Bernal, head of emerging markets at Bulltick Capital Markets in Miami. “The hardcore litigants will remain out of the swap.”
Bernal called the proposal to swap foreign debt for bonds paying in Buenos Aires a “pragmatic” move, adding that it would be easier than getting the necessary number of bondholders to agree on changing covenants of existing bonds.
8. SECOND CIRCUIT SIDES WITH FUNDS IN ARGENTINE DEBT CASE (Palm Beach Daily Business Review)
By Jan Wolfe
27 August 2013
In a victory for hedge funds holding debt of Argentina, the U.S. Court of Appeals for the Second Circuit refused to narrow injunctions intended to pressure the South American country to repay the funds. The ruling brings NML Capital Ltd. and other hedge funds closer to collecting about $1.3 billion.
The dispute stems from the Argentine government’s 2001 default on roughly $90 billion in sovereign debt. Argentina has repaid investors that were willing to take about 30 cents on the dollar, known as “exchange bondholders.” But the government has refused to pay a cent to investors like NML and EM Ltd. (sometimes called “vulture funds”), which acquired Argentine bonds on the cheap and are demanding to be repaid in full.
To pressure Argentina to pay, U.S. District Judge Thomas Griesa in Manhattan crafted a series of injunctions in 2011 that would block Argentina from prioritizing exchange bondholders over distressed debt investors like NML. The injunctions apply to a batch of pending lawsuits over $1.3 billion in bonds. The Second Circuit affirmed Griesa’s injunctions last October, ruling that Argentina’s repayment scheme violated a contractual promise to treat all bondholders equally. On remand, Griesa in November clarified that third-party financial institutions would likely be violating the injunction if they assisted Argentina in making continued payments to exchange bondholders. He also ruled that when Argentina pays the exchange bondholders, it must make a “ratable” payment to the hedge funds that includes principal and accrued interest.
In its ruling Friday, the Second Circuit affirmed that Griesa’s injunctions also apply to third-party banks. It also rejected Argentina’s argument that the “ratable” repayment formula is inequitable because it allows the plaintiffs to recover full principal and interest, whereas the exchange bondholders are currently receiving payments on just their accrued interest. Griesa did “no more than hold Argentina to its contractual obligation of equal treatment,” the court wrote.
The Second Circuit, however, stayed enforcement of the injunctions until the Supreme Court decides whether to review the case. Argentina’s lawyers filed a certiorari petition in June, arguing that the injunctions violate the Foreign Sovereign Immunities Act by restricting Argentina’s use of its property.
The hedge fund plaintiffs are represented by Debevoise & Plimpton and Gibson Dunn & Crutcher, among other firms. A Cleary Gottlieb Steen & Hamilton team including Jonathan Blackman and Carmine Boccuzzi Jr. represents Argentina. David Boies of Boies, Schiller & Flexner and the boutique O’Shea Partners represents a coalition of exchange bondholders including the hedge fund Gramercy Funds Management.
“Today’s opinion unfortunately glosses over the inequitable impact of the injunction on the Exchange Bondholders’ constitutionally protected property rights,” Sean O’Shea of O’Shea Partners said in statement.
9. ARGENTINA GOVERNMENT SEEKS TO REBUILD POWER AFTER ELECTION ROUT (Market News International)
By Charles Newbery
26 August 2013
Argentina’s government this week will seek to rebuild power after a worse-than-expected election result while a U.S. court ruling has put it at the risk of a second financial crisis in a decade.
President Cristina Fernandez de Kirchner last week sought to drum up support after her Front for Victory party suffered a defeat in the Aug. 11 national primary for the Oct. 27 midterm congressional election.
CFK last week made her first in a series of planned meetings with banking, business and union leaders, comparing the economy with Australia and Canada’s and leaving little room for criticism.
This drew widespread scorn in a country stagnating with 25% annual inflation, low investment and rising crime, prompting the president to send out a raft of tweets to pound home her beliefs and slam the press for conspiring against her.
She said the country’s finances are far from flimsy as the opposition insists, with the national debt just 18.8% of GDP compared with 27% in Australia and 86% in Canada, adding that the international reserves to foreign debt ratio is 26% compared with 3.6% in Australia and 5.2% in Canada.
Even so, talk has started on the end of the Front for Victory era that began with Nestor Kirchner, the president’s late husband. His administration helped pull the country out of a 2001-2002 economic crisis with 8% average growth between 2003 and 2011, thanks largely to a boom in international soybean prices, a main export.
The boom helped CFK win reelection in 2011 with 54% of the votes even though she failed to tackle inflation, which has surged despite heavy handed government policies to keep prices down.
Nor has she created adequate conditions for investment, which has led to a decline in the supply of goods, in particular energy. Rising imports of diesel, fuel oil and natural gas are reducing the trade surplus and costing the state billions of dollars.
Buenos Aires Gov. Daniel Scioli, a long-time ally of the president yet with an equally tenuous relationship, said Argentina needs to create a climate “without uncertainty” to rebuild the economy.
Another big battle will be with creditors that declined to accept an about 70% haircut to swap their bonds in two debt restructurings of the nearly $100 billion in defaulted bonds from 2001.
A group of these so-called holdouts are suing for $1.33 billion, and last week a U.S. appeals court rejected the government’s proposal to pay them the same rate paid in the restructurings.
The court, however, said the $1.33 billion payment would be on hold pending a decision by the U.S. Supreme Court to review the case. This has kept Argentina out of a technical default.
The government will report July supermarket and shopping mall sales Tuesday followed Friday at the same time by construction activity and consumption of public services for the same period.
10. ELECTORAL PRESSURES RAISE TAX RISKS IN ARGENTINA AS GOVERNMENT CONSIDERS US COURT RULING (IHS Global Insight Daily Analysis)
By Laurence Allan
26 August 2013
The Argentine government is assessing how to resource potential tax boost for lower income sectors.
IHS Global Insight perspective
Significance
The Argentine government is considering tax rises on some sectors to allow it to lift the income tax floor for its core support base.
Implications
Concerns about the country’s potential financial position were sharpened by a ruling by a US court on the debt ‘holdouts’ on 23 August, but the government is still seeking populist measures before the 27 October mid-term elections.
Outlook
Although the mining sector looks an obvious government target for tax increases, that risk is partly mitigated in the short term by the political costs of a conflict with the mining industry in the run-up to the October elections.
Argentine president Cristina Fernández de Kirchner after the government’s disappointing performance in the 11 August primaries.PA.17294719
The Argentine government of President Cristina Fernández de Kirchner is considering raising taxes on the country’s mining and other sectors in an effort to generate revenue that will allow it to raise the earnings point at which employees start to pay income tax. The government move to lift the level at which income tax is payable fits clearly within its self-described ‘national and popular’ style, and would be the second such income tax reform in 2013. In electoral terms, it is clearly aimed at buttressing Fernández’s support base in lower-income sectors after a disappointing government performance in the 11 August primaries.
Fernández met business sector leaders on 21 August and informed them that the government intends to raise the ‘Ganancias’ tax (the level at which people start to pay tax), according to reports in the country’s media. It is unclear exactly how many Argentine workers that move might potentially benefit. However, given ongoing concerns about the government’s fiscal position, it is clear that any such move will need to be funded by the generation of fresh revenue elsewhere. One area that the government is considering in that respect is Argentine tourism overseas – Argentines travelling outside the country are already subject to a 20% government tax on credit card spending overseas. Argentina’s Central Bank assessed that Argentine tourists spent USD5.4billion abroad in the first six months of 2013, so they would seem a likely target for further attention from the government. With the government likely to view the majority of Argentines travelling and spending overseas as middle-class – and therefore not forming part of its potential support base – it is likely to view such a move as relatively low-cost in political terms.
The government is also reported to be considering raising withholding taxes on mining exports to fund the move on income tax, according to Argentine financial daily Ambito Financiero, although the government remains cautious about such a move in view of falling global prices for minerals. The impact of tax rises on mining exporters would almost certainly prove conflictive and could also drive disagreement between the national authorities and local authorities in Argentina’s mining provinces. These regions depend heavily on mining for local economic dynamism and as a major revenue stream that pays for public services and salaries, mainly in western Argentina. However, that does not totally outweigh the importance to the Fernández government of the revenue that a move on mining taxes could potentially generate, but does partially mitigate the risk of that decision taking place before the 27 October elections.
Outlook and implications
These moves take place against the background of what could prove to be a rather more significant challenge for the government and the Argentine economy more broadly. On 23 August, a New York City court ruled against Argentina in the long-running legal battle between it and so-called ‘holdouts’ – holders of USD1.3 billion of Argentine debt related to the 2002 default who elected not to enter two debt swaps in 2005 and 2010 (see Argentina: 28 March 2013: ). The court ruling in principle means that Argentina must pay those holdouts the full value of their bonds, with at least the first payment of the outstanding interest – USD67million – due to begin on 30 September, with two further payments due on 2 and 31 December. A stay on payment of the debt itself could be effective until November, when the US Supreme Court will decide whether or not it will accept jurisdiction over the case. That buys the Argentine government some political breathing space, allowing it to keep telling the Argentine electorate that its battle with the holdouts – or ‘vulture funds’, as Fernández describes them – is ethical, without seeing major consequences potentially challenging that position until after the 27 October mid-terms. However, if potential government action on raising taxes looks likely to generate revenue for moves designed to boost its electoral support, the risk of such policy being rolled out more aggressively looks higher after the elections, when without electoral concerns in the immediate foreground, Fernández could look to the mining sector to take on an increased tax burden.
11. ARGENTINE AIRPORT WORKERS THREATEN STRIKE OVER LAN EVICTION (Dow Jones Global News Select)
By Shane Romig and Graciela Ibanez
26 August 2013
BUENOS AIRES -(Dow Jones)- Latam Airlines Group SA (LFL, LAN.SN) received wide support from Argentina’s airport personnel and cabin crews who have called for a nationwide strike Thursday to protest the government evicting the company’s LAN Argentina unit from a hangar at the central Buenos Aires airport.
Last week, the local airports regulator Orsna ordered Chile’s LAN to leave the hangar by August 29, despite the carrier having a lease until 2023. Those airport facilities are designated only for use by the government, and LAN, being a private company, can’t use them, the regulator said.
Critics say the move is aimed at crippling LAN’s operations in Argentina and giving an advantage to state-owned Aerolineas Argentinas and Austral.
LAN filed a lawsuit in Argentine court Monday and is seeking an injunction blocking the order for it to vacate the hangar, a company spokesman said.
Without the hangar at Aeroparque Jorge Newbery airport, LAN says it can’t provide maintenance to the smaller airplanes that fly within Argentina, making the domestic operation unviable. The company plans to continue using Aeroparque for international flights.
Travelers seek out flights to and from Aeroparque due to its easy access from Buenos Aires. The other option is the main international airport, Ezeiza, located about 30 kilometers from the city center.
Aircraft technicians, ground crews, air traffic controllers and cabin crews from LAN Argentina, Aerolineas Argentinas, Austral, Andes and Sol airlines will go on strike the moment that LAN is evicted, the Aircraft technicians association APTA and the flight attendant association ATCPEA said in a joint statement.
The strike is to protest the “unjust, unnecessary and abusive threats” made against LAN by the federal aviation authorities, the associations said.
Argentine officials stood by the contract recision. LAN “tried to take a technical issue and make it political,” Orsna’s president Gustavo Lipovich said in a statement.
“The decision isn’t based on getting LAN out of Aeroparque… rather it’s a technical question given the large growth of the airport,” he said.
There isn’t any plan to “kick out LAN or any other airline,” Aerolineas Argentinas said in a statement.
However, analysts noted that there are strong nationalist sentiments in play.
“It’s inevitably political,” said Patricio Navia, political analyst and professor at New York University. “Because of the implications of having the most visible Chilean company in Argentina persecuted by the Argentine authorities in favor of Aerolineas Argentinas, a state company that is closely tied to [Argentine president Cristina] Kirchner’s allies.”
The Argentine move, “doesn’t meet the minimal standards for international law related to the treatment of foreigners,” said Hernan Felipe Errazuriz, Chile’s former foreign affairs minister and partner at Guerrero Olivos Novoa Errazuriz law firm.
A spokesman for Aerolineas Argentinas did not return messages seeking comment.
The conflict reached both country’s foreign affairs ministers, who discussed LAN’s situation in Santiago Friday. After the meeting, Argentinean minister Hector Timerman said he can’t solve a company’s problems. A few Argentine governors from provinces bordering Chile worried that tourism would decrease if LAN stopped its local operations.
Most likely, LAN plans to escalate the conflict and threaten to fold up operations in Argentina in a bid to build up support among middle-class Argentines, Mr. Navia said.
In May, LAN suspended its Argentine flights one day because Argentina’s state-run ground services company, Intercargo, stopped offering ramp services, refused to load equipment and declined to transfer passengers on buses to and from LAN’s airplanes in a dispute over fees. The conflict ended after LAN agreed to pay Intercargo nearly $4 million as part of a new, more expensive contract.
The carrier, Latin America’s biggest, has repeatedly said it will continue operating in Argentina, which accounted for around 9% of 2012 revenue, as long as the government allows it. Currently LAN flies to 14 destinations in Argentina and employs about 3,000 workers.
The clash over the hangar in Buenos Aires comes at a difficult time for Latam Airlines, which reported a $330 million net loss in the second quarter, mostly due to a depreciation of the Brazilian real against the dollar.
Latam Airlines was formed in June 2012 from the merger between Chilean LAN Airlines and Brazilian carrier TAM.
12. URUGUAY SEEKS TO SELL SUPPLIES FROM LNG PROJECT TO ARGENTINA (Platts Commodity News)
By Charles Newbery
26 August 2013
Buenos Aires (Platts)–26Aug2013/704 pm EDT/2304 GMT   Uruguay plans to eventually sell natural gas supplies to neighboring Argentina once it has a floating terminal in place to receive liquefied natural gas supplies, an official said Monday.
A first draft of the supply agreement could come as soon as Tuesday, when presidents of both countries are scheduled to meet in Montevideo to inaugurate projects at the 50,000 barrel a day La Teja oil refinery there, Raul Sendic, president of Uruguay’s state-owned energy company ANCAP, said in a statement. The deal would be between ANCAP and Argentina’s state-run YPF, he added.
“We have prepared a draft [agreement] between ANCAP and YPF to create a task group to study the future supply of gas from Uruguay to Argentina,” Sendic said.
In May, ANCAP awarded to France’s GDF Suez a contract to build the country’s first LNG regasification terminal. It will have a send-out capacity of 10-15 million cubic meters a day and will start receiving cargoes as soon as March 2015, according to ANCAP.
Uruguay is betting on the project to help diversify energy supply and suppliers so it can reduce its reliance on hydropower and imported oil. While it only consumes about 300,000 cu m/d of gas piped in from Argentina, authorities say power plants alone could boost the country’s consumption to 5 million cu m/d.
Uruguay had planned to expand gas distribution in the early 2000s, but a cutback in expected deliveries of up to 8 million cu m/d from Argentina made that impossible. Argentina reduced its gas exports to contend with shortages at home as its own gas output declined, forcing it to ramp up gas imports. Gas meets 50% of energy needs in Argentina.
In response, Uruguay opted to build the regasification terminal to guarantee steady deliveries instead of relying on a single supplier. Argentina was on board the LNG project at first but pulled out without saying why, prompting ANCAP to go it alone.
Even so, Sendic said in May that ANCAP would be able to export excess supplies from the LNG terminal, most likely to Argentina over a bidirectional pipeline running between the countries.
13. ARGENTINE WHEAT SAFE FOR NOW FROM LATE WINTER FROST (Kingston Whig Standard)
By Hugh Bronstein
27 August 2013
BUENOS AIRES — A late-winter cold snap in Argentina raised concern about the country’s recently sown wheat crop at a time of high world demand and soaring local prices, but local experts said on Monday that the low temperatures have done little or no damage.
The weather worries supported Chicago futures and came just as Argentina’s northern neighbor and main wheat buyer, Brazil, said it will have a smaller-than- expected crop this year due to July frosts. World demand for wheat is solid this year due in part to steady demand from China.
Most local meteorologists and analysts said the Antarctic air that blasted Argentina over the weekend and early on Monday will not affect 2013/14 yields because it hit too early in the season for Argentine wheat plants to be vulnerable.
“The leaves on some of the more susceptible varieties (of wheat) may have suffered from the cold, but the plants themselves can recuperate,” said Tomas Parenti, weather expert at the Rosario grains exchange
“The frosts could have done irreversible damage had the plants been in a more advanced and vulnerable growing stage when the temperature dropped,” he added.
Chicago Board of Trade wheat futures rose more than 3 percent on Monday, the biggest one-day advance since April, on spillover strength from corn and soybeans, short-covering and worries about frost-bitten South American farms.
The South American grains powerhouse is expected to produce 12 million tonnes of wheat during the crop year, half of which is for export, according to the U.S. Department of Agriculture (USDA). Argentina is a ma-j or world supplier of wheat, corn, soybeans, soyoil and soymeal animal feed.
The Commodity Weather Group, a private U.S. forecaster, reported that temperatures fell to the upper teens to lower 20s Fahrenheit (minus 9 to minus 4 degrees Celsius) in 20 percent of the Argentine wheat belt, cold enough to damage crops in the early jointing stage.
But local growers and farm sector analysts said it was too soon after planting for any real damage to have been done.
“Frost can hurt wheat in Argentina when the plants are in their sprig-forming stage, starting around Sept. 15,” said Pablo Adreani of the local Agripac consultancy. “Today’s frosts cannot hurt potential yields very much because the plants are still in their vegetative stage.”
“Until mid-September, frost is not a problem for Argentine wheat,” said Gabriel Perez, analyst at the Mercampo consultancy.
The crop has just begun to cover parts of the Pampas grains belt with a carpet of green sprouts set to grow through the spring and be harvested in December and January, at the height of the Southern Hemisphere summer.
Between now and then, Argentina faces a wheat shortage that has prompted the government to adopt price controls to try to keep bread on consumers’ tables ahead of October’s midterm congressional election.
Export limits meant to ensure ample domestic food supplies backfired this year as the government approved too much wheat for export based on optimistic early season crop estimates.
Interest in the upcoming crop is intense, as very little wheat remains in Argentina to be milled into flour for bread.
Voters, concerned about double digit inflation and other effects of President Cristina Fernandez’s unorthodox economic policies, gave her a drubbing in this month’s mid-term primary. Candidates sponsored by the 60- year-old two-term president got only 26 percent of the vote nationwide.
14. EMBARKING ON A FOREIGN JOURNEY (Farm Industry News)
By Kathy Huting
26 August 2013
This week I leave for what will very likely be a once-in-a-lifetime experience. I’m saying “adios” to the U.S. as I embark on a journey to Uruguay and Argentina, where I’ll be bringing some unique coverage to you about the agriculture industries in each of those countries. The event is the 2013 International Federation of Agricultural Journalists Congress in Argentina, but first up is the pre-tour stop in Montevideo, Uruguay.
70% of Uruguay’s exports are agricultural. Beef is the primary agricultural export, and farmers in Uruguay also produce wool, vegetables, dairy, poultry and hogs. So there should be plenty to learn about the production of each of these commodities, but there will also be some unique opportunities. For instance, one stop we’ll make is at Ruta del Olivo, which is a company focused on olive-growing enterprises in the country.
After a couple of days in Uruguay, we’ll travel to Buenos Aires, Argentina, where the main program will start. Agricultural journalists from around the world will convene in Buenos Aires, where we will learn all about the country’s thriving agriculture industry.
Half of Argentina’s industrial exports are agricultural in nature. The major agricultural exports include soybeans, corn and wheat. We will visit farms where some of these items are produced, and we’ll learn about Argentinian agriculture as we travel from Buenos Aires, to a few hours away in San Pedro, and finally Rosario city. I’ll spend a day taking a grain tour and I hope to bring to you comparisons on what Argentinian grain production looks like compared to our practices in the U.S.
Farm Industry News has brought you international farm show coverage before, but I hope to bring you a different view of what agriculture is like internationally through my experiences in Uruguay and Argentina. I hope to do that through the conversations I’ll have with farmers, political leaders, local media and more. And here’s hoping that second major in Spanish from Iowa State pays off, too.
Stay tuned to hear more about my foreign adventures.
One organization that made it possible for me to attend the Congress was the American Ag Editors Association through their Professional Improvement Fund. Thanks to AAEA for providing this opportunity to bring you some very unique coverage and help spread the message about agriculture’s importance.
15. RENOWNED ARCHITECT IS NOW ON BOARD; CESAR PELLI JOINS TEAM REDESIGNING AIRPORT (The Times-Picayune)
Doug MacCash
27 August 2013
Cesar Pelli, an international architecture star, has joined the team redesigning the Louis Armstrong New Orleans International Airport, according to an announcement by airport officials.
If all goes as imagined, the $826 million project will result in a new 30-gate terminal, complete with hotel, parking garage, highway access and other amenities. The airport rebuild is supposed to be finished by New Orleans’ 300th anniversary on May 5, 2018.
Pelli is an ideal choice to bring big-name caché and airport design expertise to the ambitious endeavor. Pelli, 86, was born in Argentina and immigrated to the United States when he was in his 20s. His innumerable career highlights include a stint as dean of the Yale University School of Architecture and his design of the gorgeous Petronas Towers in Kuala Lumpur, Malaysia — the world’s tallest building from 1998 to 2004.
In 1956, Pelli assisted modern master Eero Saarinen on the design of the iconic gull-winger TWA terminal at what is now John F. Kennedy International airport in New York. Forty years later, Pelli designed the Ronald Reagan International Airport terminal in Washington D.C. The D.C. airport is one of the nations’ loveliest, with its charming iron-ribbed ceiling, round skylights and elegant floor mosaics.
In a 1997 interview with the Washington Post, Pelli defined some of his airport design criteria: “I like airport terminals that have lots of natural light, that are spacious, that make you feel comfortable, where being there is a pleasant thing. It is also important that directions be easy to follow. Unfortunately, most airports have been designed primarily for the convenience of the airlines. People are just an inconvenience.
“The (airport) public spaces should be such that they don’t contribute to the stress. They should make the experience of being in the airport as pleasant and as uplifting as one can make it. I love that word, ‘uplifting,’ for an airport.”
Pelli recently made his mark on New Orleans with the soaring silvery interior of Xavier University’s new St. Katharine Drexel Chapel that opened in October 2012.
Pelli joins New Orleans’ William Raymond Manning of Manning Architects and Lionelle Hewitt of Hewitt Washington Architects in the Armstrong airport redesign.
It was earlier reported that the old sections of the current terminal will be demolished. The current terminal, capped by an arched atrium, was designed in 1959 by the firm Goldstein, Parham and Labouisse with Herbert A. Benson and George J. Riehl.
The airport opened in 1940. Ironically, it was named for aviation pioneer John Moisant, who crashed and died at the site in 1910 after flying from City Park. In 2001, the airport was renamed for jazz legend Louis Armstrong, though the airport code MSY still recalls the earliest name of the field: Moisant Stock Yards.
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WEDNESDAY

1. ARGENTINA BONDS FALL ON DEBT-SWAP OFFER (The Wall Street Journal)
By Shane Romig
August 27, 2013
*Maneuver Follows U.S. Legal Setback.
BUENOS AIRES–A maneuver by Argentina’s government to try to pay creditors by circumventing U.S. court orders sent most of the country’s debt securities prices plunging on Tuesday.
In the latest move in a decade-old legal saga over the country’s momentous 2001 default on about $100 billion of debts, President Cristina Kirchner on Monday said the government will offer to pay its investors in Buenos Aires rather than in New York. It also plans to reopen for a second time the debt swap, allowing investors holding old defaulted bonds to trade in for new bonds, at a hefty discount.
The move was in response to U.S. Second Circuit Appeals Court ruling last week affirming a judgment blocking Argentine payments in New York on new bonds issued as part of the dept swap unless it also settles the $1.33 billion plus interest it owes to holdout creditors. The block is on hold pending an appeal to the U.S. Supreme Court.
Owners of the new bonds have a tough choice to make: either agree to receive their money in Buenos Aires instead of in New York, or face the possibility that Argentina might not be able to keep making payments on the New York bonds.
Argentina’s currency controls, limits on getting dividends out of the country and shifting policies also add a significant level of risk compared to New York bond law. There’s also a risk that U.S. courts seek to block Argentina’s attempts to move payments to Buenos Aires, potentially making creditors who make the switch liable for contempt of court. District Judge Thomas Griesa has issued an order prohibiting anyone from participating in Argentine maneuvers to skirt his rulings.
“The last thing we would consider would be swapping New York law bonds for Argentina local law bonds,” said Jim Craige, portfolio manager at Stone Harbor Investment Partners LP which holds a “negligible” amount of Argentina’s defaulted debt but none of the swap bonds. “I’m not sure if they’re going to pay us in soybeans or pesos but it’s probably not going to be dollars.”
Analysts said the proposed swap may give holdouts all they need to go to the appeals court and ask it to lift its stay. Then it becomes a question of whether anyone in New York is willing to help Argentina carry out the swap and risk being accused of violating the court order.
“If the stay is lifted I don’t see who is going to carry the water for them in New York and at what price,” said Anna Gelpern, professor of law at Georgetown University and a fellow at the Peterson Institute for International Economics.
With default more likely, the cost to insure Argentina’s sovereign debt against default rose to $2.804 million per year for five years to protect $10 million of debt, from $2.475 million per year late Monday, according to data provider Markit.
In the 2005 and 2010 swap offers, about 93% of the old bonds were tendered, with investors accepting losses of about two-thirds of face value.
The outstanding 7% are held by the holdout creditors led by Aurelius Capital Management and Elliott Management Corp.’s NML Capital Ltd., who are expected to continue pursuing demands in U.S. courts.
A spokesman for NML declined to comment on Tuesday. Aurelius could not be reached for comment.
Despite the worries, some investors took heart at the payment assurance.
“I’d rather get paid in dollars in Argentina rather than get paid nothing in New York,” said Ray Zucaro, portfolio manager and managing principal at SW Asset Management LLC. Mr. Zucaro’s firm has $375 million under management and holds some Argentine securities known as GDP warrants. He said his company would likely participate in the proposed swap.
“The government is reopening the swap not to escape from U.S. legislation but to protect the investors who participated in the previous swaps in 2005 and 2010,” said Aldo Pignanelli, a former president of the Central Bank of Argentina. “This clearly shows the government wants to continue paying them.”
Argentina will likely be able to sway more holders of defaulted bonds to accept the new swap, perhaps taking the acceptance rate over 95%, Alberto Bernal-León, head of research at Bulltick Capital Markets, said in a note. The move “shows pragmatism from the government,” Mr. Bernal-León said. “We continue to contend that Argentine bonds will outperform its emerging market peers this year by a very wide margin.”
Other holders of Argentina’s restructured bonds are waiting to see the details of the swap implementation before deciding if the move is positive or negative for overseas bondholders.
“It could go one way or the other,” said Emilio Ilac, managing director of institutional clients at investment bank Puente. Puente submitted a brief to the U.S. appeals court arguing that payment shouldn’t be blocked to bondholders who accepted the restructuring.
2. ARGENTINA TO DEFY U.S. COURT WITH BOND PLAN; PRESIDENT FERNANDEZ PROPOSES A SWAP WITH NEW DEBT ISSUED OUT OF HER COUNTRY (Los Angeles Times)
By Ken Bensinger
28 August 2013
Just days after a U.S. appeals court ruled that Argentina must pay a small group of bond investors more than $1.3 billion, the country’s president laid out a debt-swapping plan designed to get around the decision entirely.
The move was the latest bizarre twist in the long-fought dispute over the nation’s unpaid debts, a battle that has involved a seized warship and a profusion of public vitriol while capturing the attention of the international finance community.
The defiant new proposal, disclosed late Monday on national television by President Cristina Fernandez de Kirchner, may mark a turning point in the matter because it could accelerate the slow-moving legal process in the U.S. and push the South American nation into technical default.
In a wide-ranging address, Fernandez said she would ask the country’s legislature to pass a law offering holders of the nation’s bonds the chance to swap them for new bonds issued out of Argentina instead of New York.
The idea, she said, was “to avoid any barriers to payment because we have suffered such barriers before.”
The proposal flies in the face of an unfavorable ruling Friday by the U.S. 2nd Circuit Court of Appeals in New York.
That case stems from Argentina’s 2001 default on nearly $100 billion in sovereign debt. The nation settled with investors holding about 93% of the bonds by swapping the securities out for discounted ones issued in 2005 and 2010.
But holders of the remaining 7% refused the deals, and some, led by hedge funds Elliott Management and Aurelius Capital Management, sued in federal court in New York.
Last year, a district judge found that Argentina had violated its debt contracts and must pay the holdouts face value plus interest or it couldn’t pay anyone, including those who agreed to the swap.
Friday’s ruling, by a three-judge panel, upheld that decision and barred Argentina’s bank in New York from processing any payments to bondholders without also including the holdouts.
Fernandez has vowed publicly never to pay the holdout investors more than those who settled.
Under the proposal she outlined in her televised address, Argentina would offer all bondholders a chance to swap their securities issued in the U.S. for new bonds issued in Argentina under the same terms as those in the renegotiated bonds.
Her plan could engender more trouble with U.S. courts, as the circuit court judges explicitly warned Argentina against attempting to find another forum to pay its creditors as a way to dodge the ruling.
The 2nd Circuit also issued a temporary stay on its ruling, pending a U.S. Supreme Court review of a prior decision in the case. But Argentina’s announcement could prompt the appeals court to lift the stay.
In that event, Argentina could be faced with a difficult choice: pay all the bondholders or default on the exchange bonds as well. For bondholders, the new proposal by Fernandez presents a dilemma.
Although investors generally prefer the legal protections offered by U.S.-issued bonds, Argentina’s pledge never to pay the holdouts, and the recent court ruling, may give them a dire choice: roll the dice in Argentina or get nothing in New York.
Fernandez, who expressed hope that the case would still be resolved in the U.S. legal system, prayed that “God shine down on the United States Supreme Court.”
She also portrayed the situation as a matter of fairness. She said that those holdouts who sued Argentina represented just 0.45% of the original bonds and that they shouldn’t determine the fate of the vast majority of investors who accepted the exchange.
Elliott has not disclosed its holdings or the price it paid to acquire them in the secondary market. The hedge fund specializes in buying distressed debt at a discount and then suing for full value.
Last fall, for instance, it and other holdouts successfully petitioned a court in Ghana to seize an Argentine military ship, but the boat was eventually released.
Fernandez’s speech, which lasted about half an hour and included a history of the country’s borrowing habits that blamed prior administrations for Argentina’s financial woes, was followed by a barrage of more than 40 blasts from the president’s Twitter account, @CFKArgentina.
“This past Friday we have proven definitively that history is always just around the corner, particularly when it comes to economics,” one tweet reads.
3. URUGUAY INAUGURATES DESULFURIZATION PLANT FOR ITS REFINERY IN JOINT VENTURE WITH ARGENTINA (The Washington Post)
August 27, 2013
MONTEVIDEO, Uruguay — Uruguay has inaugurated a desulfurization plant for the county’s sole oil refinery.
The refinery expansion in Montevideo is a joint venture of Argentina’s state-owned YPF and Uruguay’s ANCAP oil companies.
The plant will reduce by 99.5 percent the amount of sulfur in diesel fuel and some 85 percent in gasoline to improve ANCAP’s environmental standards and efficiency. The sulfur will be collected and sold to a Uruguayan company to be used for fertilizers.
Argentine President Cristina Fernandez said during the plant’s unveiling Tuesday that the $400 million investment marks a milestone in relations between the neighboring nations.
Uruguayan President Jose Mujica said the expansion helps ANCAP to remain in the industry as the sulfur was badly damaging the refinery’s equipment. Uruguay’s presidency puts the investment at about $350 million.
4. ARGENTINE ROULETTE (Financial Times)
By Joseph Cotterill
August 27, 2013
They did it! They finally did it, post-Second Circuit fiasco:
Argentina will send a bill to Congress tomorrow [August 27] to reopen a debt restructuring for those creditors who haven’t accepted previous swaps after the nation’s 2001 default, said President Cristina Fernandez de Kirchner…
She also said that holders of restructured bonds, who accepted discounts of as much as 70 percent, will be able to swap them into securities governed by Argentine law in a bid to prevent payment disruptions from a U.S. court ruling in favor of the holdouts.
We first looked at the why and how of using a local-law swap to get round the pari passu problem which Argentina has made for itself — back in November. That’s how interminable this pari passu saga has been.
Much more in CFK’s speech. Come for the baldly disingenuous assertion that calling Argentina a “uniquely recalcitrant” debtor is “un poco injusto”; stay for confirmation that the new bonds would be paid through Caja de Valores, the local clearing house. Surely it’s not about showing credibility to the Supreme Court by reopening the swap to holdouts: the actual plaintiffs won’t take the offer, and the judges haven’t considered Argentina’s petition directly yet.
FT Alphaville’s considered take on all this? It’s pretty nuts.
We’re not alone in this of course, and in truth there’s not much to add. Is it actually crazy? Well, why announce the swap now? That’s our question. It covers three areas, and it’s at least interesting to consider how complex the saga is getting…
1.) It doesn’t imply much confidence on Argentina’s part that the current stay of the rulings can hold throughout the remaining appeals and Supreme Court process.
http://ftalphaville.ft.com/files/2013/08/Barc_Arg1.png
Via Barclays — those are the next payments on the (foreign-law) restructured debt. The late 2013 ones would be covered by the stay certainly so long as the Supreme Court considers the petition (and likely gives the US government months to provide its view). This is still a courtesy from the Second Circuit to the higher court, but it’s generous to Argentina in the circumstances. But it’s still roulette: you need the stay to be in place for each of those payments (and the next payments after those), even if there are months and months between each event in the Supreme Court litigation.
It’s worth bearing in mind that the current stay dates back to November last year. Its terms said that Judge Griesa’s “November 21, 2012 orders… are all stayed” with respect to enforcing the injunction. As of the August ruling, “the amended injunctions shall be stayed” pending Supreme Court review of a “timely” cert petition by Argentina. “Timely” might not even mean the cert petition which has already been filed, implying a longish period of time. More on this below.
It’s possible, as Mark Weidemaier notes, that “all stayed” covers Griesa’s order for Argentina not to try “altering or amending the processes or specific transfer mechanisms by which it makes payments on the Exchange Bonds”. (Where a local-law swap surely fits the bill.) We’d assumed before that this bit wasn’t stayed, but we’d be the last to underrate the importance of loopholes in this case.
In any event there’s one cynical way to look at this. If Argentina could quite legally offer a swap during the stay, why not do it sooner — now — rather than later?
Well, a better question: would it really be a good idea to tempt fate here?
It’s an invitation to the holdouts to demand the stay is lifted given Argentina’s continued defiance. They’d surely do this anyway the next time an Argentine government official said something about not giving the vultures a red cent, but this is an enticing loophole.
More to the point, the Second Circuit has just made clear it doesn’t like ways of dealing with holdouts that “ignored the outstanding bonds and proposed an entirely new set of substitute bonds”. The gist of CFK’s plan also seems to involve suspending the lock law which US courts have seen as such an overt tool of subordination. Not abolishing it.
Giving an ear to the holdouts, the courts might say the stay didn’t mean to allow a swap in the first place, or they might have the terms amended anyway. In any case, Argentina’s own hedging against removal of the stay might risk lifting the stay. Not so much roulette as self-fulfilling prophecy.
2.) Nor does it imply Argentina had much confidence that Supreme Court litigation can transform this case, or buy enough time to come up with the next cunning plan.
That’s actually… fairly rational of Argentina, if it did think that. Fairly. The substance of its first petition to the Supreme Court wasn’t spectacular: Argentina didn’t have the final ruling on actual payments to complain about yet, so it was limited to alleging abuses of sovereign immunity and equitable relief by federal courts. (It hammed it up by claiming this was all “unprecedented” — it could well be — but that might be a red flag to the Supreme Court for taking up the case.)
This still doesn’t explain why Argentina is launching the swap now. That’s because the Supreme Court’s basic value to it is surely still the time on the clock it brings. Barclays analysts on Friday argued that SCOTUS end-dates for Argentina might lie as far out as June 2014 (if judges took the case on to next term’s docket and it went to argument, after granting cert) or June 2015 (if this term’s docket was full before granting cert). Any 2015 date is interesting because it heads into the point where restructured holders couldn’t sue Argentina for offering better terms than they got to holdouts, in any future deal.
This assumes the granting of cert. But then the Second Circuit’s ruling on Friday seemed to allow for a second petition by Argentina — maybe for it to complain about the payments aspects or treatment of third parties.
So with all that time on offer, it still seems weird to aggressively seek insurance on a defeat at the Supreme Court (particularly as the reported swap terms seem to imply some kind of trigger on a defeat there). What else then?
3.) The August 23 ruling might have made clear that the institutions necessary for payment of the restructured debt (which is a list starting with Bank of New York) can’t be relied on the next time Argentina tries to make a payment.
This is one of the more interesting ways to look at the swap. On the whole, Friday’s Second Circuit decision came down like a ton of bricks on third parties trying to get themselves carved out of the injunction itself.
The intriguing thing is what would happen to BNY, the trustee for the bonds, or a clearing house, should they still be in the frame when a restructured payment comes down the tubes without any accompanying payment to holdouts.
It’s nothing good — the court suggested that financial third parties “are already called on to navigate US laws forbidding participation in various international transactions”: putting the wrong kind of payment on restructured sovereign debt in the same box as money-laundering controls. But it still read unclear to us if it would be automatic contempt to assist Argentina. All the Second Circuit said was that BNY etc “will be entitled to notice and the right to be heard” if someone sued over this stuff.
But that’s kind of belied by Judge Barrington Parker more or less using a great big foam-finger to point to “exculpatory clauses” in BNY’s trustee document that the bank could use to avoid a suit. (Footnote 11 of the judgment). Which is why it’s hard to see the bank not using these clauses to get out now, or in advance of a contentious restructured payment.
In which case Argentina’s race to get Caja de Valores on board makes more sense. But then the moves to create a new payment structure might anger the US courts enough to scare away the existing structure. Not easy to arrange a bond swap on your own.
And so to see if the stay holds…
5. ARGENTINA PLANS NEW YORK-BUENOS AIRES BOND SWAP (Bloomberg News)
By Camila Russo
August  27, 2013
Argentina is offering to swap holders of New York-law bonds into debt governed by local legislation as investors shift into the notes after a U.S. court sided with creditors seeking full repayment on claims from the nation’s record default in 2001.
The move comes after the Aug. 23 ruling, which prompted dollar-denominated local law bonds due 2017 to rally and yield 3.95 percentage points less than similar-maturity notes issued under New York rules yesterday. The gap grew to within 0.11 percentage point of the record 4.06 percentage point difference April 3. At 11.85 percent, the local-law debt yielded twice the emerging-market average, according to JPMorgan Chase & Co.
Faced with the prospect of paying the holdout creditors in full or risking a second default in 12 years, President Cristina Fernandez de Kirchner said in a national address yesterday she will offer a third swap at the same terms to owners of defaulted debt who rejected previous exchanges, as well as to holders of the restructured notes. The proposal is aimed at circumventing the U.S. court ruling without reneging on payments to the New York-law bondholders.
“There was always the expectation that if Argentina couldn’t win in court, it would find anther way to get its way, for example, by re-routing payments,” Diego Ferro, co-chief investment officer at Greylock Capital Management, which oversees $500 million in emerging-market debt including restructured Argentine bonds, said in a telephone interview. “It’s a predictable patch solution that in the end guarantees that dollar debt will be paid.”
Bonds Fall
Greylock hasn’t decided whether it’ll accept the debt swap into local law, Ferro said.
Argentina’s proposal trigged declines in the local-law bonds today. The dollar securities due 2017 fell the most in four months, plunging 2.88 cents to 85.26 cents on the dollar at 2:09 p.m. in New York. Dollar notes due 2017 sold under New York law tumbled 1.73 cents to 78.43 cents on the dollar.
The appeals court on Aug. 23 said it would delay the effect of its ruling until the U.S. Supreme Court decides whether to review the case, which may not come until the first quarter of 2014, according to law firm Shearman & Sterling LLP. The stay would be lifted if the Supreme Court doesn’t take the case putting subsequent bond payments in jeopardy of default since Argentina has said it won’t obey the court orders to pay creditors Fernandez has dubbed “vultures.”
‘Serial Payers’
The debt swap would be offered into local law debt in the same terms and currency as original bonds, according to Fernandez.
“Instead of recalcitrant debtors, we are serial payers,” Fernandez, 60, said in her speech, adding that the country has paid about $174 billion in debt since 2003. “The ruling ignored the country’s accords reached with 93 percent of holders of defaulted debt.”
She also said the ruling invalidates future debt restructurings and asked God to “illuminate” the U.S. high court.
The changing of jurisdiction on performing debt governed by international law will be voluntary and dependent on the outcome of the nation’s request for the Supreme Court to take their case, a government official, who isn’t authorized to speak publicly about the plans, said in an interview. The re-opening of the swap is intended to show the Supreme Court the nation’s willingness to pay, he said.
‘Most Pragmatic’
The Supreme Court grants only one percent of about 8,000 petitions it receives every year.
“This is the most pragmatic thing they could have done,” said Alberto Bernal, head of fixed-income research at Bulltick Capital Markets in Miami. “It’s good news for bonds because it shows total willingness to pay, even if Argentina is trying to circumvent U.S. courts.”
Banks from Credit Suisse Group AG to Barclays Plc say that investors should buy local-law bonds, which are exempt from the court orders, as default risk for debt sold abroad increases after Argentina’s appeal was rejected.
“We recommend only the shortest local-law bonds in Argentina,” said Daniel Chodos, a strategist at Credit Suisse, said in a telephone interview from New York, referring to dollar notes due 2013 and 2015. “The ruling states that the order is for the exchange bonds, which were sold under foreign law, so local law bonds shouldn’t be involved.”
‘Right Mind’
Investors will probably switch to the 2015 bonds after the government pays $2 billion of principal on the 2013 bonds next month, giving the longer notes additional support, Chodos said.
“Nobody in their right mind would resign New York protection for Argentine law,” Jorge Piedrahita, chief executive officer of Torino Capital LLC in New York, said in an e-mail. “Payments would be easily embargoed by Elliott and there’s the risk of having to get the money out of Argentina.”
Argentina in 2001 defaulted on a record $95 billion of foreign debt. Holders of about 91 percent of the bonds agreed to take new exchange bonds in 2005 and 2010, at about 30 cents on the dollar. Creditors including billionaire Paul Singer’s Elliott Management Corp. have rejected the swaps.
Fernandez last week reassured bond investors that she won’t change terms on securities sold under Argentine legislation after the central bank set aside $2.3 billion for debt payments this year, of which $2 billion are for local law.
‘Important Message’
“It’s an important message to the international community because we are paying local-law maturities,” she said in an Aug. 21 speech. “We haven’t changed the terms in local law debt in 10 years and won’t start to.”
Argentina’s vow to continue paying performing bonds regardless of the court ruling had spurred speculation the government will change legislation of its New York-law exchange bonds to a jurisdiction outside the U.S.
The extra yield investors demand to own Argentine bonds over U.S. Treasuries widened 33 basis points, or 0.33 percentage point, to 1,108 basis points today, according to JPMorgan Chase & Co. data.
Argentina’s five-year credit default swaps, contracts insuring the nation’s debt against non-payment, rose 265 basis points to 2,745 basis points at 2 p.m. New York time, according to data compiled by CMA Ltd. The peso fell 0.2 percent to 5.6427.
‘Pesofication’ Risk
Still, the fastest decline in central bank reserves since 2001 is spurring concern Argentina will pay its local law bonds in pesos, a process known as “pesofication.” The fair value of Argentine government bonds due 2015, called Boden 15, is 87.2 cents per dollar, compared with yesterday’s price of 95.15, according to an Aug. 9 Citigroup Inc. report.
Argentina has $15.3 billion of dollar debt due by the end of 2015 including interest, compared with $36.9 billion of reserves as of yesterday. Reserves are on track to fall to $25 billion by the end of 2015, according to Citigroup.
South America’s second biggest economy will have enough foreign currency funds to continue making payments on dollar bonds in the next three years, Barclays Plc analyst Sebastian Vargas said in a telephone interview from New York.
“We’re keeping our market weight position and reiterating our recommendation to buy Boden 15,” Vargas said. “Instead of pesofying you could simply not even pay a dime and kick the payments five years down the road. Why would you pesofy? Instead of pesofying you would simply forcibly restructure debt, but that is not in the cards.”
6. ANALYSIS: ARGENTINA PLAYS FOR TIME IN DEBT FIGHT, SEEKS ESCAPE (Reuters News)
By Guido Nejamkis
August 27, 2013
(Reuters) – Argentina’s efforts to avoid a debt default could drag on for another year or more as it fights “holdout” bondholders to the bitter end in U.S. courts and simultaneously looks to side-step any final ruling ordering it to pay up.
President Cristina Fernandez is pursuing a raft of new appeals to keep a technical default at bay, even as she readies a voluntary debt swap to take effect when other options run out.
The government last week lost its appeal of a New York court order requiring it to pay $1.33 billion to hedge funds that refused to restructure bonds after Argentina’s record $100 billion default in 2002.
Fernandez insists her government will not pay the holdouts, but defeat in the courts could also block payments to bondholders who took part in the 2005 and 2010 restructurings. That would trigger a technical default on some $28 billion of foreign debt.
Seeking to avoid that, Fernandez is now proposing a new swap of foreign debt for bonds payable in Buenos Aires that would protect bondholders who accept the exchange by moving them beyond the reach of U.S. law.
A senior government source told Reuters the debt swap would only be pursued if Argentina’s court appeals are unsuccessful.
Even then, it would only take a handful of bondholders unwilling to accept Argentine capital controls, or unable to invest in assets outside New York, to leave some restructured bonds vulnerable to another default.
That would mean the second debt crisis in a little more than a decade for South America’s third biggest economy, which is struggling with high inflation and a poor business climate caused by heavy trade and foreign exchange controls.
Economy Minister Hernan Lorenzino says the government is pursuing three avenues to keep its legal fight alive. These include asking the three-member panel of the 2nd U.S. Circuit Court of Appeals in New York to reconsider its own decision; appealing the ruling to the full 13-judge appeals court; or appealing Friday’s decision to the U.S. Supreme Court.
“We are going ahead with all necessary appeals,” Lorenzino told local television on Sunday.
Whether or not the appeals are successful, they are also aimed at extending the stay order that protects payments on restructured bonds. Daniel Kerner of the Eurasia Group political risk consulting firm says they could delay resolution of the case for between six and 15 months.
Argentina has already asked the U.S. Supreme Court to review the original decision on which the appeals court based its ruling, and the top court as yet to decide whether or not to hear that case.
But the latest ruling might give Argentina another chance to appeal to the Supreme Court. First, Argentina has nearly three weeks to ask for a rehearing from the same judges who rendered Friday’s ruling, as well as a new hearing “en banc” before all 13 judges on the 2nd Circuit Court of Appeals.
Both requests face long odds, but a rejection of Argentina’s “en banc” appeal would give the country 90 days to make a second appeal to the Supreme Court. That could push a final decision deep into 2014.
“The Supreme Court will take a month or two to request an opinion from the Solicitor General, which would take two to six months to give one. Then it’s usually resolved within 60 days (whether to hear the case),” said attorney Marcelo Etchebarne, a partner with Cabanellas Etchebarne Kelly in New York.
The chances are slim of a hearing before the Supreme Court, which usually hears fewer than 100 of the roughly 10,000 cases in which it is petitioned each year.
JUDGES’ RESTRAINT
Argentina has so far avoided a final reckoning thanks to the restraint shown by judges. The appeals court surprised some observers last week with a stay order delaying implementation of its decision pending review by the Supreme Court.
But it is unclear how much longer U.S. courts will tolerate the defiance of the South American nation that 2nd Circuit Judge Barrington Parker called a “uniquely recalcitrant debtor.”
“Argentina’s officials have publicly and repeatedly announced their intention to defy any rulings of this Court and the district court with which they disagree,” Parker wrote in the decision rebuking the country on Friday.
The country’s attempt to move its sovereign debt beyond the reach of U.S. law is just the kind of maneuver courts have specifically warned against, lawyers said, raising the risk that judges could reconsider their stay order.
Were the Supreme Court to eventually take up the case, it could demand that Argentina set aside some $1.5 billion in escrow to ensure it obeys an eventual ruling. President Fernandez has so far refused any commitment that could satisfy the demands of the holdout creditors she calls “vulture funds.”
If the Supreme Court turns down the case or Argentina refuses its conditions for a hearing, the lower court’s decision would oblige the country to pay holdout creditors in full when they make their next bond payment.
The ruling is a vindication for dissident bondholders led by Aurelius Capital Management and NML Capital Ltd, a unit of Paul Singer’s Elliott Management Corp, who are demanding full payment. They have argued that Argentina cannot deny them their due while paying investors who agreed to restructurings.
But the 93 percent of bondholders who renegotiated debts after Argentina’s 2002 default, accepting less than 30 cents on the dollar, now worry that the refusal to pay holdouts in the face of court orders could freeze payments on restructured bonds as well.
Argentina has promised to keep paying obligations on its restructured debt. Lorenzino said on Sunday that the country would continue paying holders of those bonds “on the same terms, in the same currency, over the same period.”
“We’re going to keep paying as we have until now, on the same terms,” Lorenzino told a state news agency on Saturday, calling the previous day’s appeals court ruling “an attempt to bring the country back to 2001.”
7. ARGENTINA COUNTRY RISK RISES AFTER PROPOSED DEBT SWAP (Reuters News)
By Walter Bianchi and Brad Haynes
August 27, 2013
(Reuters) – Argentina’s debt insurance costs and bond yields rose on Tuesday, as the country’s attempt to move its sovereign debt beyond the reach of foreign law risked aggravating U.S. judges in a legal battle with holdout bondholders.
President Cristina Fernandez offered late on Monday to exchange foreign debts for bonds paying in Buenos Aires, in a move that may skirt a U.S. court decision requiring it to pay the holdouts $1.3 billion.
“The fear is that Argentina is trying to avoid the court’s ruling,” said Alejo Costa, the head of strategy at investment bank Puente, based in Buenos Aires. “If Argentina tries to defy the court and judges lift their stay order, we have a problem.”
Argentina has so far avoided a potential debt crisis thanks to judges’ restraint. Last week a U.S. appeals court surprised some observers with a stay order delaying implementation of its decision pending review by the Supreme Court.
Refusing to pay holdouts despite court orders could block Argentina’s payment of the 93 percent of bondholders who participated in the country’s 2005 and 2010 restructurings.
Five-year credit default swaps rose 350 basis points early on Tuesday and the country’s risk premium rose 23 basis points to 1,098 basis points, according to J.P.Morgan’s EMBI+ index. The risk premium represents the spread in the yield between the Argentine bonds and comparable U.S. Treasuries.
Argentina’s dollar-denominated discount bond fell 3 percent in the Buenos Aires over-the-counter market.
8. ARGENTINA BOND-SWAP PLAN SENDS DEBT-SECURITIES PRICES PLUNGING (Dow Jones News Service)
By Shane Romig
27 August 2013
BUENOS AIRES–A ploy by Argentina’s government to try to pay creditors by circumventing U.S. court orders sent most of the country’s debt securities prices plunging on Tuesday.
In the latest move in a decade-old legal saga over the country’s momentous 2001 default on about $100 billion of debts, President Cristina Kirchner on Monday said the government will offer to pay its investors in Buenos Aires rather than in New York. It also plans to reopen for a second time the debt swap, allowing investors holding old defaulted bonds to trade in for new bonds, at a hefty discount.
The move was in response to U.S. Second Circuit Appeals Court ruling last week affirming a judgment blocking Argentine payments in New York on new bonds issued as part of the debt swap unless it also settles the $1.33 billion plus interest it owes to holdout creditors. The block is on hold pending an appeal to the U.S. Supreme Court.
Owners of the new bonds have a tough choice to make: either agree to receive their money in Buenos Aires instead of in New York, or face the possibility that Argentina might not be able to keep making payments on the New York bonds.
Argentina’s currency controls, limits on getting dividends out of the country, and shifting policies also add a significant level of risk compared to New York bond laws. There’s also a risk that U.S. courts seek to block Argentina’s attempts to move payments to Buenos Aires, potentially making creditors who make the switch liable for contempt of court. District Judge Thomas Griesa has issued an order prohibiting anyone from participating in Argentine maneuvers to skirt his rulings.
“The last thing we would consider would be swapping New York law bonds for Argentina local law bonds,” said Jim Craige, portfolio manager at Stone Harbor Investment Partners LP, which holds a “negligible” amount of Argentina’s defaulted debt but none of the swap bonds. “I’m not sure if they’re going to pay us in soybeans or pesos but it’s probably not going to be dollars.”
Analysts said the proposed swap may give holdouts all they need to go to the appeals court and ask it to lift its stay. Then it becomes a question of whether anyone in New York is willing to help Argentina carry out the swap and risk being accused of violating the court order.
“If the stay is lifted, I don’t see who is going to carry the water for them in New York and at what price,” said Anna Gelpern, professor of law at Georgetown University and a fellow at the Peterson Institute for International Economics.
The cost to insure Argentina’s sovereign debt against default rose to $2.804 million a year for five years to protect $10 million of debt, from $2.475 million a year late Monday, according to data provider Markit.
In the 2005 and 2010 swap offers, about 93% of the old bonds were tendered, with investors accepting losses of about two-thirds of face value.
The outstanding 7% are held by the holdout creditors led by Aurelius Capital Management and Elliott Management Corp.’s NML Capital Ltd., which are expected to continue pursuing their demands in U.S. courts.
A spokesman for NML declined to comment on Tuesday. Aurelius could not be reached for comment.
Despite the worries, some investors took heart at the payment assurance.
“I’d rather get paid in dollars in Argentina rather than get paid nothing in New York,” said Ray Zucaro, portfolio manager and managing principal at SW Asset Management LLC. Mr. Zucaro’s firm has $375 million under management and holds some Argentine securities known as GDP warrants. He said his company would likely participate in the proposed swap.
“The government is reopening the swap not to escape from U.S. legislation but to protect the investors who participated in the previous swaps in 2005 and 2010,” said Aldo Pignanelli, a former president of the Central Bank of Argentina. “This clearly shows the government wants to continue paying them.”
Argentina will likely be able to sway more holders of defaulted bonds to accept the new swap, perhaps taking the acceptance rate over 95%, Alberto Bernal-Leon, head of research at Bulltick Capital Markets, said in a note. The move “shows pragmatism from the government,” Mr. Bernal-Leon said. “We continue to contend that Argentine bonds will outperform its emerging market peers this year by a very wide margin.”
Other holders of Argentina’s restructured bonds are waiting to see the details of the swap implementation before deciding if the move is positive or negative for overseas bondholders.
“It could go one way or the other,” said Emilio Ilac, managing director of institutional clients at investment bank Puente. Puente submitted a brief to the U.S. appeals court arguing that payment shouldn’t be blocked to bondholders who accepted the restructuring.
9. ARGENTINE PRESIDENT, SPURNING US COURTS, SAYS HOLDERS OF BAD DEBT CAN COLLECT IN BUENOS AIRES (AP Newswire (Government Feed))
By Debora Rey
26 August 2013
BUENOS AIRES, Argentina (AP) – Argentina’s president revealed Monday night how she’ll try to defy U.S. courts that have ruled against her government in a decade-long, billion-dollar legal fight over debts that have been unpaid since the country’s world-record, $100 billion default.
Rather than comply with Friday’s unanimous ruling ordering her government to pay $1.4 billion in cash to a group of plaintiffs she calls “vulture funds,” President Cristina Fernandez is proposing another debt swap: offering new bonds to be paid in dollars in Buenos Aires to anyone still holding defaulted debt.
Fernandez made the announcement in a surprise address to the nation, saying the U.S. federal appellate judges were unfair to label Argentina a deadbeat. She said Argentina has made $173 billion in debt payments since 2003 and will pay $2 billion more on Sept. 12.
“Rather than `recalcitrant debtors,’ we are serial payers,” she said.
The proposal she is sending to congress Tuesday is her long-awaited “Plan B” for answering court rulings requiring Argentina to first pay cash to a small fraction of “holdouts” who sued rather than join the more than 92 percent of bondholders who provided Argentina with billions of dollars in debt relief in 2005 and 2010. Those who joined in the debt swap have been paid ever since.
Friday’s court ruling seemed to leave Fernandez with no wiggle room: If she keeps refusing to pay the holdouts, Argentina’s payments to those who accepted previous swaps will be embargoed by the U.S. financial system, forcing the country into another default.
Argentina has filed a long-shot appeal to the U.S. Supreme Court, but meanwhile Fernandez is proposing that any bondholders who haven’t been paid, or who fear that their current payments will get held up, can trade their New York-law bonds for new bonds whose contracts will be enforced under Argentine law.
“We can’t keep the country under a `Sword of Damocles,'” she said. “The first decision we made is to ask God to shine down on the United States Supreme Court.”
“We’ve made two more decisions: Tomorrow we’re going to send a proposed law to Congress … to open for the third time the debt swap, for the 7 percent that haven’t entered. We want to face up to the promises of Argentina.”
She said bondholders who have worked with Argentina will be able to trade their current bonds for new ones under the same payment terms, but paid in Argentina rather than New York.
“Those who have Argentine bonds, we are going to replace these with similar bonds, in foreign currency, and under the same terms, but paid here in Argentina,” she said.
Analysts have predicted that any attempt to pay bondholders in Buenos Aires rather than comply with the U.S. courts will fail, reasoning that few bondholders who now can turn to courts in New York in any dispute with Argentina’s government will be willing to risk a change that makes Argentine courts the final arbiter.
10. ARGENTINA OFFERS BOND SWAP TO SKIRT U.S. COURT RULINGS (HedgeWorld News)
By Alejandro Lifschitz and Brad Haynes
27 August 2013
BUENOS AIRES, Argentina (Reuters)—Argentina’s government is proposing a voluntary bond swap on its foreign debt, shifting payments to Buenos Aires, if it cannot overturn U.S. court rulings that threaten to trigger its second debt crisis in just over a decade.
The bond swap would allow Argentina to keep paying the creditors who agreed to restructure the country’s sovereign debt after a record $100 billion default in 2002, President Cristina Fernandez said in a televised address on Monday night [Aug. 26].
Investors in international markets would have the option to swap their foreign debt for Argentine bonds if ongoing appeals of the U.S. court rulings are rejected, a government source told Reuters on condition of anonymity.
Argentina on Friday [Aug. 23] lost its appeal of a U.S. court order requiring it to pay $1.33 billion to “holdout” hedge funds that refused steep discounts following the 2002 default.
If Argentina refuses to pay off the holdouts in full, the ruling could block payment overseas to the 93 percent of bondholders who accepted restructurings in 2005 and 2010 that give them less than 30 cents on the dollar.
In a direct plea to the U.S. Supreme Court, Ms. Fernandez urged justices to overturn the decision, which she warned could undermine future sovereign debt restructurings. She also proposed a third restructuring of Argentina’s defaulted debt, offering holdouts another opportunity at the terms offered in the 2010 bond swap.
Her more conciliatory tone contrasted sharply with her past denunciations of the so-called “vulture funds” she accuses of trying to bankrupt the country. That defiant attitude had drawn the ire of judges in the United States, who fault Argentina for a lack of good faith negotiation with creditors.
Still, Ms. Fernandez insisted that her government was meeting its obligations and rejected one appeals court judge’s description of Argentina as a “uniquely recalcitrant debtor.”
“I would say that rather than ‘recalcitrant debtors’ we are serial payers,” she said. “Just as the country entered the Guinness (World Records) for the biggest sovereign debt default, we should also be in the Guinness among the countries that have most fulfilled our obligations over the past 10 years.”
In the 2005 and 2010 restructurings, Argentina issued international debt under New York, British and Japanese law. But Ms. Fernandez’s proposal of a new bond swap raised questions about whether investors would be interested in taking Argentine bonds in lieu of foreign debt, given strict currency and capital controls that the left-leaning Ms. Fernandez’ government has imposed.
“Changing the location of the payments to Buenos Aires is going to be extremely complicated amid the currency controls,” said Jorge Todesca, a former deputy economy minister who is now head of the Finsoport economic consultancy. “Argentina will never be able to issue public debt abroad if it continues trying to dodge a settlement. We can assume Argentina will continue to be financially isolated from the rest of the world as long as this goes on.”
The president said she would send a bill to Argentina’s Congress on Tuesday [Aug. 27] in order to offer remaining holdouts the same terms as the restructured debts.
“I expect some holdouts to take this opportunity and tender their defaulted debt,” said Alberto Bernal, head of emerging markets at Bulltick Capital Markets in Miami. “The hardcore litigants will remain out of the swap.”
Mr. Bernal called the proposal to swap foreign debt for bonds paying in Buenos Aires a “pragmatic” move, adding that it would be easier than getting the necessary number of bondholders to agree on changing covenants of existing bonds.
11. ARGENTINA ECONOMY: QUICK VIEW – ARGENTINA TO REOPEN DEBT SWAP (Economist Intelligence Unit – ViewsWire)
27 August 2013
Event
In late August a US appeals court upheld the ruling of a New York court, which forces Argentina to repay litigant “holdout” creditors (who did not accept the terms of debt restructurings in 2005 or 2010) in full. The government has responded by announcing a reopening of the 2010 debt exchange.
Analysis
The US appeals court decision will not be enforced until the US Supreme Court decides whether it will take up a request by Argentina to review the case. Legal experts have suggested that the Supreme Court is unlikely to reverse the appeals court decision, and may not take up the case. Probable delays in the legal process mean that a decision is unlikely before early 2014.
In the interim period, the government appears to be trying to encourage holders of restructured debt voluntarily to agree to exchange their bonds issued under New York law for local jurisdiction bonds. Although Argentinian officials have suggested that they want the 7% of creditors who had not yet restructured their debts to join in the swap, this is extremely unlikely, especially after the US appeals court decision in favour of litigant holdouts. Instead, the authorities appear to be attempting to avoid payment disruptions to current creditors in the likely event that Argentina refuses to comply with an unfavourable court ruling.
By agreeing a voluntary restructuring, Argentina will hope to avoid a technical default. However, it is unclear whether the swap of foreign-jurisdiction bonds with local-jurisdiction bonds (terms that would be considered prejudicial)-when the alternative appears to be non-payment of New York law bonds-constitutes a voluntary restructuring.
12. ARGENTINA THUMBS NOSE AT U.S. COURTS WITH NEW DEBT SWAP OFFER (Dow Jones Top Global Market Stories)
By Shane Romig
27 August 2013
BUENOS AIRES — Argentina’s third debt swap offer since its momentous 2001 default on about $100 billion sent bond prices slumping Tuesday after the government vowed to pay creditors who accepted earlier swaps but refused to offer anything more to holdouts who rejected the restructuring deals.
The maneuver is seen as an attempt by the government to circumvent U.S. court orders in a decade-old legal saga. Argentina is trying to make payments on new bonds held by investors that have accepted two previous debt swaps while trying to avoid paying the committed group of so-called “holdout” creditors who are demanding repayment in full on the old bonds.
Investors holding the new bonds face a tough choice: either agree to receive their money in Buenos Aires, instead of in New York, or face the likelihood that Argentina will stop making payments on the New York bonds altogether.
The cost to insure Argentina’s sovereign debt against default rose to $2.804 million per year for five years to protect $10 million of debt, from $2.475 million per year late Monday, according to data provider Markit.
The losses overseas stem from a U.S. court decision in which Argentina was told it cannot make any payments on the new bonds unless it also settles the $1.33 billion plus interest it owes on the old bonds. An appeal is pending at the U.S. Supreme Court.
Late Tuesday, Argentina’s President Cristina Kirchner said the new proposal would allow investors that currently receive payment on their new bonds in New York to continue to be paid under identical terms in Buenos Aires.
At the same time, the president also said Argentina would reopen the bond swap first carried out in 2005, under identical terms.
In the 2005 and 2010 swap offers, about 93% of the old bonds were tendered, with investors accepting losses of about two-thirds of face value. The outstanding 7% are held by the holdouts.
The new swap offer “shows our profound commitment to paying our debt to bondholders,” Mrs. Kirchner said in a televised speech Monday.
Investors holding the old, defaulted bonds are likely to continue to pursue their demands through U.S. courts.
“The last thing we would consider would be swapping New York law bonds for Argentina local law bonds,” said Jim Craige, portfolio manager at Stone Harbor Investment Partners which holds a “negligible” amount of Argentina’s defaulted debt but none of the swap bonds. “I’m not sure if they’re going to pay us in soybeans or pesos but it’s probably not going to be dollars.”
Investors holding the new bonds face a choice between a possible default in New York, or the tight currency controls and political uncertainty in Argentina.
While currently they would be able to repatriate the bond payments made in Buenos Aires, those currency controls in Argentina and recent limits on companies getting dividends out of the country give pause for thought, said Goldman Sachs economist Alberto Ramos. “Things can change [and] what safeguards are there that two or three years down the road” those bonds won’t be converted into pesos or requirements imposed to keep the money inside Argentina, Mr. Ramos said.
“I’d rather get paid in dollars in Argentina rather than get paid nothing in New York,” said Ray Zucaro, portfolio manager and managing principal at SW Asset Management. Mr. Zucaro’s firm has $375 million under management and holds some Argentine securities know as GDP warrants. He said that would likely participate in the proposed bond swap.
Analysts said the swap for the new bonds from New York to Buenos Aires would be enormously complex, and risks a reaction from U.S. courts. The 2nd U.S. Circuit Court of Appeals has ordered Argentina to pay a group of holdout creditors led by Aurelius Capital Management and Elliott Management Corp.’s NML Capital Ltd.
A spokesman for NML declined to comment on Tuesday.
The U.S. courts might seek to block Argentina’s attempts to switch payments to Buenos Aires, potentially making creditors who take new bonds for the old ones liable for contempt of court. Judge Thomas Griesa has issued an order prohibiting anyone from participating in Argentine maneuvers to skirt his rulings.
The swap also opens up the potential of creating a new group of holdout creditors who refuse to exchange the New York bonds for Argentine ones and can sue in the U.S. if the country defaults on the New York bonds.
Current holders of Argentina’s restructured bonds are waiting to see the details of the swap implementation before deciding if the move is positive or negative for overseas bondholders.
“It could go one way or the other,” said Emilio Ilac, managing director of institutional clients at one of Argentina’s largest investment banks, Puente. Puente submitted a brief to the U.S. appeals court arguing that payment shouldn’t be blocked to bondholders who accepted the restructuring.
While skepticism abounds, others took heart at the government’s attempts to ensure payment to creditors who accepted the swaps.
“The government is reopening the swap not to escape from U.S. legislation but to protect the investors who participated in the previous swaps in 2005 and 2010,” said Aldo Pignanelli, a former president of the Central Bank of Argentina. “This clearly shows the government wants to continuing paying them.”
Argentina will likely be able to sway more holders of defaulted bonds to accept the new swap, perhaps taking the acceptance rate over 95%, said Alberto Bernal-Leon, head of research at Bulltick Capital Markets, in a note. The move “shows pragmatism from the government,” Mr. Bernal-Leon said. “We continue to contend that Argentine bonds will outperform its emerging market peers this year by a very wide margin.”
13. ARGENTINA’S SOVEREIGN DEBT INSURANCE COSTS RISE (Dow Jones Global Equities News)
By Erin McCarthy
27 August 2013
The cost to insure Argentina’s sovereign debt against default rose Tuesday as markets digested the country’s plans to let investors swap foreign-law bonds for new debt.
The bond swap plans, announced by President Cristina Kirchner Monday, come as the government deals with the fallout from a U.S court decision last week that ordered Argentina to pay a group of so-called holdout bondholders 100% of the roughly $1.33 billion they are owed in principal and accrued interest.
But market reaction reflected uncertainty about how Argentina would actually execute the plan.
“It’s not enough to announce the intention. We need a proposal that explains how this works,” said Siobhan Morden, head of Latin America research at Jefferies. “Until we have those details, we’re going to trade on that execution risk.”
The cost to insure Argentina’s sovereign debt against default rose to $2.667 million per year for five years to protect $10 million of debt, from $2.475 million per year late Monday, according to data provider Markit.
14. ARGENTINA PLANS NEW TAX ON TRADING OF PRIVATE-COMPANY SHARES (Dow Jones Global Equities News)
27 August 2013
BUENOS AIRES–Argentina will slap a pair of new taxes on investments to make up for the increase in the minimum income threshold for low-income workers subject to income tax.
The government plans to impose a new 10% tax on dividend payments and a 15% tax on foreigners buying local securities of companies not listed on the local exchange, said the head of the federal tax agency, Ricardo Echegaray.
The government plans to send a bill to congress for the new taxes, which involve a 15% duty for “buying and selling of shares and securities that aren’t listed on at the exchange,” the tax agency Afip said in a statement. That tax should raise ARS697 million ($124 million), according to Afip.
In addition, “the 10% tax on dividends that companies distribute to shareholders will contribute ARS1.359 billion a year,” Afip said.
While the details of the bill still aren’t clear, in principle, this exempts publicly traded companies and investments, said Ezequiel Estrada, head of research at Bull Market Brokers.
The increased revenue is designed to make up for a rise in the minimum income threshold subject to income tax. The minimum salary that will be subject to tax was raised to 15,000 pesos, from ARS8,300 for a single worker and ARS11,563 for a worker supporting a family.
15. ARGENTINE ECONOMY SEEN SLOWING DOWN AFTER Q2 REVIVAL (Business News Americas)
27 August 2013
The Argentine economy is likely to have seen a significant acceleration in the second quarter but is poised to slow down after the mid-term congressional elections in October, according to estimates from Capital Economics.
The London-based research firm’s own Argentina Activity Indicator (AAI) points to a 3.0% year-on-year expansion in 2Q13, up from around 0.5% in the first quarter, the firm said in a report.
As a result of the lack of credibility surrounding the official figures that the government provides through the country’s statistics agency (Indec), Capital Economics created the indicator to track the performance of Argentina’s economy. The AAI uses data from a range of independent sources for its economic growth estimations.
Indec has not yet published its 2Q13 figures.
Moving forward, the latest indicators suggest that the recent revival in Argentina’s economy continued in early 3Q13, but beyond this the growth outlook is far less certain, Capital Economics said.
The firm notes that the Argentine economy has been supported by a pre-election fiscal loosening – financed by printing money – ahead of the mid-term elections. In addition, there is the risk of a sovereign debt default.
“With this support likely to be withdrawn, or at least scaled back, after October’s congressional elections, we expect the pace of growth to slow once again heading into 2014.”
SECOND QUARTER REVIVAL
There has been some evidence of improvement in all major sectors in the second quarter, said Capital Economics, which pointed out that output in Argentina’s important agriculture sector has now fully recovered from the 2012 drought, with this year’s harvest expected to reach a record 105Mt.
Data points to the construction sector growing over 5% in 2Q13 after a 3% contraction in the previous quarter, while the manufacturing sector likely expanded around 3.5% in the second quarter after shrinking in year-on-year terms for the previous four quarters, the report said.
Capital Economics also noted that service sector activity continues to pick up slowly with the economic research consultancy’s own services proxy – based on a range of household and labor market indicators – growing 2.5% in the second quarter compared to 2.0% in 1Q13.
16. ARGENTINA, URUGUAY CALL FOR SOUTH AMERICAN ENERGY INTEGRATION (Platts Commodity News)
By Charles Newbery
27 August 2013
Buenos Aires (Platts)–27Aug2013/423 pm EDT/2023 GMT (Updating to add agreement signed by ANCAP, YPF)
The presidents of Argentina and Uruguay called Tuesday on neighboring countries in South America to pursue energy integration and self-sufficiency to sustain economic growth in the region.
An “energy ring in South America is central for our development,” Argentine President Cristina Fernandez de Kirchner said in a televised address at the opening of two hydrodesulfurization units at the 50,000 b/d La Teja oil refinery in Montevideo, Uruguay.
Argentina’s state-run energy company YPF built the $400 million units for Uruguay’s state-owned ANCAP, helping to reduce sulfur content in diesel by 99.5% and in gasoline by 85% at the refinery.
Fernandez de Kirchner said the joint effort is a sign of energy integration in the region. She added that more energy is needed for economic development in both countries, which she described as having “marvelous land” for agriculture production.
“We need to add value to everything we do,” she said. “This is impossible without energy, and that is why the energy ring is key.”
Uruguayan President Jose Mujica echoed the call for regional energy integration.
“The weak must come together with their peers to be something and be someone in the world or we are nothing,” he said.
Neither specified any other projects that could form part of this energy integration, though ANCAP and YPF Tuesday signed an agreement to study joint projects.
The companies will seek “to optimize energy development in both countries,” ANCAP said in a statement.
The companies will create a task force “to analyze future agreements,” according to the memorandum of understanding signed by ANCAP President Raul Sendic and his YPF counterpart, Miguel Galuccio.
A possibility is for Uruguay to sell excess supplies of LNG from a floating regasification terminal to be built off the coast of Montevideo, ANCAP said. The terminal will have a send-out capacity of 10-15 million cubic meters/d and will start receiving cargoes as soon as March 2015, according to ANCAP.
17. FALKLAND FRONTRUNNERS LEFT OFF ARGENTINA’S 20-YEAR BAN (Business News Americas)
27 August 2013
Argentina has banned four oil and gas companies involved in offshore exploration near the Falkland Islands, though the two firms involved in the archipelago’s first commercially viable discovery were not mentioned.
Falkland Oil and Gas (AIM: FOGL), Borders & Southern Petroleum (AIM: BOR), Argos Resources (AIM: ARG.L) and Desire Petroleum (AIM: DES) were banned from operating in Argentine territory for the next 20 years via official decree.
No mention was made of junior explorer Rockhopper (AIM: RKH) or Premier Oil (LSE: PMO) to whom Rockhopper farmed-out 60% of its licenses in the North Falklands basin in 2012, including the archipelago’s first commercially viable discovery Sea Lion.
Rockhopper and Premier, both of which recently upped their initial production expectations, were, however, mentioned in Argentina’s blacklist in June.
Argentina, which fought and lost a 74-day war with the UK in 1982 over the sovereignty of the islands, claims the firms require approval from Argentine authorities given the Falkland basins sit on the Argentine continental shelf, which the country claims as national territory.
Despite Argentina’s threats of legal action against E&P firms, Stephen Luxton, director of the Falkland Islands’ Department of Mineral Resources, recently told BNamericas that the pressure has not materially affected development, however, companies with interests in Argentina are inevitably not that keen on working in the Falklands.
In related news Argos Resources (AIM: ARG) is pursuing a farm-out partner for its PL001 production license, adjacent to the Sea Lion discovery, in order to further exploration drilling, chairman Ian Thomson said in the company’s latest half-year report. The junior posted a US$1.2mn loss in the first half of 2013 compared to a US$0.8mn loss in 1H12.
Argos’ most up-to-date competent persons report for its 1,126km2 licensed area describes 52 prospects and 40 leads with a total unrisked potential of 3.1Bb of prospective recoverable resources in the most likely case and more than 10Bb in the upside case.

 

Moi et les trois chats joyeux =*&gt;:) devil=  =*&gt;:) devil=  =*&gt;:) devil=
=======================
MONDAY, AUG 19TH
 
 
 
 
 
 
 
 
 
 
 
 
 
1. US APPEALS COURT UPHOLDS RULING ORDERING ARGENTINA TO PAY BOND DEBT FROM 2001 DEFAULT (The Washington Post)
By Michael Warren
August 23, 2013
NEW YORK — A U.S. appeals court gave Argentina’s spurned bondholders a substantial $1.4 billion victory on Friday in their lengthy legal battle to collect debts unpaid since the country’s world-record 2001 default.
The 2nd U.S. Circuit Court of Appeals in Manhattan unanimously rejected every Argentine argument, saying the country had failed to provide any proof that “cataclysmic repercussions” could result if it’s forced to keep the promises it made in its 1990s bond contracts.
“What the consequences predicted by Argentina have in common is that they are speculative, hyperbolic and almost entirely of the Republic’s own making,” the three-judge panel wrote.
The only good news for Argentina was that the judges stayed payment pending a U.S. Supreme Court appeal. The high court rarely accepts such cases, but the stay probably puts off any final decision until next year, well after Argentina’s congressional elections in October.
President Cristina Fernandez has publicly vowed to pay “not one dollar to the ‘vulture funds’,” led by New York billionaire Paul Singer and other U.S. investors, whom she accused of preying on countries in crisis. Argentina’s lawyers even told the judges that her government won’t pay no matter how they rule.

Argentina also made a point backed by the Obama administration and the International Monetary Fund: That the court’s method of forcing payment, by stopping other bond payments if it doesn’t comply, could destabilize the global financial system and make future debt relief much more difficult worldwide.

But the judges said “such cases are unlikely to occur in the future” because “Argentina has been a uniquely recalcitrant debtor.”

 

“Our role is not to craft a resolution that will solve all the problems that might arise in hypothetical future litigation involving other bonds and other nations,” the judges added.

 
Argentine officials have warned that the impact of a ruling against the country could be severe, since a novel payment formula already generally upheld by the appellate court last year could prompt the South American government to default again if it doesn’t comply.
But the judges essentially said the Fernandez government would only have itself to blame if that happens.
Activists who believe that powerful lenders should take a backseat to a country’s citizens during sovereign debt crises criticized the ruling.
“The religious community is saddened by today’s decision as it hurts poor people around the globe,” Eric LeCompte said in a statement from the Jubilee USA Network, a religious anti-poverty campaign. “Our eyes are on the U.S. Supreme Court. We pray the court will not forget the world’s poor as they consider taking the case.”
But Theodore B. Olson, a lawyer for bondholder Elliot Management Corp., said the decision was sound.
“Today’s unanimous, well-reasoned decision appropriately condemns Argentina’s persistent violation of its obligations and its extraordinary defiance of the laws of the United States and the orders of U.S. courts,” Olsen said in a statement. “It confirms that Argentina is not above the law.”
Fernandez made no immediate comment about the ruling, which came down as she met privately with top ministers inside her official residence in suburban Buenos Aires.
The U.S. case stems from Argentina’s financial crisis a dozen years ago, when the government defaulted on $100 billion in debts, and some investors scooped up nearly worthless Argentine bonds. Fernandez’s late husband, President Nestor Kirchner, eventually offered creditors new bonds that initially paid less than 30 cents for each dollar of bad debt. More than 90 percent of bondholders agreed; the rest sued.
This small fraction of bondholders, many of whom bought the debt securities at cut-rate prices, demanded that Argentina make good on its promises to pay 100 percent plus interest in the event of a default. U.S. District Judge Thomas Griesa agreed, and ordered payment in cash of $1.3 billion, plus interest to Singer’s NML Capital Ltd. and 18 other holdout creditors.
When Argentina issued the bonds in 1994, it promised to treat them “at least equally with its other external indebtedness,” the appeals court wrote. “As we have held, by defaulting on the bonds, enacting legislation specifically forbidding future payment on them, and continuing to pay interest on subsequently issued debt, Argentina breached its promise of equal treatment.”
Exasperated with Fernandez’s refusal to pay, Griesa finally agreed with the drastic approach suggested by NML: He would hold the Bank of New York and other U.S. financial institutions in contempt if they don’t become the court’s enforcers, blocking Argentina’s efforts to pay other bondholders if it hasn’t first paid the plaintiffs an equal amount.
The proposed formula sent shudders through the international bond business last year and prompted dozens of friend-of-court objections, including warnings from the U.S. Treasury, the U.S. Federal Reserve and the nation’s leading banks that the judge’s remedy mustn’t do anything to slow down the system that smoothly handles electronic transfers of trillions of dollars in transactions every day.
The judges countered that their ruling “affirms a proposition essential to the integrity of the capital markets: borrowers and lenders may, under New York law, negotiate mutually agreeable terms for their transactions, but they will be held to those terms.”
Economist Arturo Porzecanski, an emerging markets specialist at American University in Washington, said no other country in modern history has so stubbornly refused to honor its commitments, not only to repay sovereign debts but also to comply with arbitration rulings and pay nearly $9 billion it owes in principal and interest on loans from import-export agencies in Europe, Japan, the US and beyond, as represented by the Paris Club of international lenders.
For all these reasons, he said it’s not likely that the ruling will harm any country other than Argentina.
“We’ve never seen such a rogue sovereign debtor like we’ve had in Argentina. Thanks to that, we’ve now seen the limits of what’s possible, what’s the meaning of all those financial contracts, what’s the potential for collecting,” Porzecanski said. “This is legal history in the making.”
Charles R. Blitzer, a former IMF official and a consultant with significant experience in debt restructurings like Argentina’s, said the ruling should end concerns that it will be harder to put together rescue packages calling for creditors to accept less than they are owed by countries in distress. The judges “went out of the way to emphasize this is a very narrow application” because of Argentina’s specific behavior,” he said.
Blitzer urged both sides to negotiate a settlement in light of this ruling.
Argentina’s government has made it clear throughout that it will instead attempt a “plan B” maneuver, and try to persuade bondholders to accept payments somewhere other than New York, beyond the reach of U.S. justice, said Juan Pablo Ronderas of the abeceb.com consultancy in Buenos Aires.
“It forces the government to try some financial engineering,” he said.
The judges appeared to warn any would-be partners of Argentina against such a ploy in a footnote to their ruling that referred to “whether U.S. sanctions legally apply to non-U.S. persons or institutions,” Porzecanski noted.
“It’s a salvo across the plan B bow,” he said. “The judges have said that just because you’re a non-U.S. financial entity, don’t think you’re beyond the reach of U.S. policy.”
2. ARGENTINA’S DUBBING DECREE PROMISES VOICE-OVERS IN A ‘NEUTRAL’ LOCAL ACCENT (The Washington Post)
August 23, 2013
BUENOS AIRES, Argentina — Argentines call popcorn “pochoclo,” but you wouldn’t know that watching television here, where many shows are made in the U.S. and come dubbed by actors with Mexican or Spanish accents who call it “palomitas.”
In a bid to recover part of Argentina’s lost cultural heritage, create more jobs and stir up nationalist pride in an election year, President Cristina Fernandez has decreed that certain broadcast TV shows must be dubbed instead into Argentina’s lyrical brand of Spanish, though stipulating the language must be “neutral” enough for all Latin Americans to understand,
The move won praise from Argentine film director Carlos Mentasti, whose most recent hit, “A Chinese Tale,” beautifully captures a Buenos Aires culture clash. He complains that something important is lost when kids grow up listening to voice-overs that sound nothing like how their families and neighbors talk.
“Impregnated by television and videogames, Argentine kids often use, from a very young age, words that aren’t part of our idiosyncrasy,” Mentasti said. “That’s why supporting everything that’s ours when it comes to culture is always positive.”
That hasn’t stopped the move from being lampooned on social media around Latin America, playing on the stereotype that Argentines consider themselves more European and therefore superior to all their neighbors.
The Argentine way of speaking is highly distinctive, especially when served up in the “porteno” accent that instantly marks people from the nation’s capital. Spanish here was heavily influenced by the waves of European immigrants who arrived in South America a century ago, and Argentines still employ grammatical constructions considered a bit archaic in many other Latin American countries.
A page for parodies on Facebook, fed by Twitter with the hashtag #doblajesargentinos, has earned 60,000 likes as people invent new Argentine subtitles for classic movie scenes. For example, while “Play it again, Sam” in Casablanca, directly and neutrally translated, might be expressed as “Tocala de nuevo, Sam,” someone suggested that Argentine dubbers would employ an off-color chant crowds shout at rock concerts to encourage bands to play an encore.
Much of the slang Argentines speak daily is too raw to be printed in family newspapers, but there have been tamer posts, too, like an Argentine Darth Vader saying “Lucas, soy tu viejo,” as in, “Luke, I’m your old man” rather than “Luke, I’m your father.”
The measure implements a never-enforced, 25-year-old law requiring that foreign-language shows, movies and commercials that are broadcast on local television must be dubbed by actors who share “the phonetic characteristics” of Argentines.
All such content must be registered with the government, and any station or content provider failing to comply will be fined. The money will go to fund Argentina’s filmmaking industry.
The decree is great news for local actors who will get more work dubbing and be able to charge intellectual property rights for movies, Argentine Dubbing School director Dany de Alzaga said. But the July 15 decree, which gives government regulators until Sept. 15 to implement the law, left many questions unanswered and provided for several major exceptions.
It ruled out new voice-overs for imported content that arrives already dubbed in another country’s Spanish. It applies only to broadcast television, not cable TV or films shown in movie theaters, and it can only be enforced for content aimed solely at Argentine audiences, exempting shows that are broadcast to many countries. Weeks after the decree, the two government agencies in charge of implementing the law are still waiting for guidance from the presidency on how to go about it.
The law doesn’t say who is expected to foot the bill for the new dubbing, and it is also unclear how it will affect subtitles.
A group representing the hearing-impaired is concerned enough to circulate an online petition insisting that dubbing not replace subtitles that make watching television possible for more than a half-million Argentines who have hearing disabilities.
Others say the move has less to do with culture than stoking nationalism ahead of midterm congressional elections on Oct. 27.
But for many Argentines, those criticisms — and the ribbing of their Latin American neighbors — is of secondary concern. They say Argentine culture must come first, and that citizens have a right to listen to programs that sound right to them.
“It’s true that Argentines feel quite different. It’s also true that this ‘neutral’ or ‘Latin-American’ tone we hear on many programs doesn’t represent us,” said philosopher and writer Alejandro Rozitchner. “I don’t know if this law is good or bad, but it’s true that years and years of watching dubbed programming generates feelings of something foreign: We don’t speak this way.”
3. COURT RULES AGAINST ARGENTINA IN BOND CASE (The Wall Street Journal)
By Shane Romig And Chad Bray
August 23, 2013
A U.S. appeals court ruled in favor of Argentina’s holdout creditors in their bid to be paid in full on long-defaulted bonds.
That sets the stage for a Supreme Court showdown and increases the odds that Argentina will default for the second time in just over a decade.
The U.S. Second Circuit Court of Appeals in New York ruled Friday that if Argentina keeps up its payments to creditors who accepted a discounted restructuring offer, then it also must pay a group of holdout bondholders 100% of the roughly $1.33 billion they are owed in principal and accrued interest. However, it kept a stay in place on enforcement of the ruling while the U.S. Supreme Court decides whether to review the case.
“It’s a tough ruling, and it seems they accepted all the plaintiffs’ arguments,” said Eugenio Bruno, an attorney at Argentine law firm Estudio Garrido, which represents several creditors that accepted the swap offers.
The Supreme Court could decide whether or not to hear Argentina’s appeal shortly after the justices come back from break on Oct. 7.
The ruling “condemns Argentina’s persistent violation of its obligations and its extraordinary defiance” of U.S. laws and courts, said Theodore B. Olson, attorney for plaintiff NML Capital Ltd.
Other creditors who accepted the bond swaps called the ruling unfair but took heart at the suspension of enforcement.
The reaction in the bond market was muted, as many investors were expecting the court to rule against Argentina, analysts said. Argentina’s sovereign dollar bonds weakened in thin trading. Analysts said the widely expected ruling left these bonds with little reason to climb significantly higher after seeing gains over the past few weeks.
“I think it’s mildly positive [for the bonds] because it buys Argentina some time on their appeal effort,” said Siobhan Morden, head of Latin America research at Jefferies.
The cost to insure Argentina’s sovereign debt against default rose Friday, reversing earlier declines seen immediately after the ruling. It currently costs $2.5 million annually for five years to protect $10 million in Argentine debt from default, from $2.28 million late Thursday, according to data provider Markit.
“We look forward to the opportunity to present the Exchange Bondholders’ position to the Supreme Court,” said Sean O’Shea, of O’Shea Partners, co-counsel with Boies Schiller & Flexner LLP for the Exchange Bondholders Group and Gramercy Funds Management LLC.
Argentina has been locked in a long-running battle with a group of hedge funds led by Aurelius Capital Management and Elliott Management Corp.’s NML unit, which are suing for full repayment of their defaulted bonds. NML was founded by U.S. hedge-fund billionaire Paul Singer, who has a history of buying distressed debt on the cheap and pursuing payment at face value. They have pursued Argentina in courts across the globe, and NML even temporarily seized an Argentine navy ship in training in Ghana for several months last year before a United Nations tribunal ordered it released.
The holdouts have successfully argued in U.S. courts that the equal-treatment clauses in their defaulted bonds mean those securities have the same payment priority as the new bonds Argentina issued to creditors in heavily discounted debt swaps in 2005 and 2010.
Argentine economist Nicolas Dujovne said that the decision to stay the ruling for now eases pressure on the government of President Cristina Kirchner, which otherwise could have been pushed into making nationalistic decisions on the matter ahead of congressional elections in October.
Analysts say Argentina may seek to avoid complying with a definitive ruling by defaulting on its overseas bonds and then reissuing debt under local law—outside the reach of U.S. courts—to compensate those creditors.
Argentine officials had no comment Friday, but earlier this year, Vice President Amado Boudou said the government would continue to pay holders of the restructured debt even if its payment proposal failed to sway the U.S. courts.
Ordered by a lower U.S. court to offer equal payment terms to holders of the restructured bonds and the defaulted bonds, Buenos Aires earlier this year proposed giving the holdouts discounted bonds similar to the ones other creditors agreed to accept in the previous debt restructurings.
The Second Circuit said that offer wasn’t enough and slammed Argentina’s “intention to defy any rulings of this Court…with which they disagree.”
The case has ramifications for future global debt-restructuring offers. International Monetary Fund officials have said that if the holdout creditors prevail, investors may be more inclined to resist other nations’ debt-restructuring offers, in the hopes of getting a fuller payout.
However, the Second Circuit played down those broader implications. “This case is an exceptional one with little apparent bearing on transactions that can be expected in the future,” the court said in its ruling on Friday.
“Cases like this one are unlikely to occur in the future because Argentina has been a uniquely recalcitrant debtor and because newer bonds almost universally include collective-action clauses which permit a supermajority of bondholders to impose a restructuring on potential holdouts,” the court said.
“There’s a lot of uncertainty and there’s potential for default after the Supreme Court rules or decides not to rule,” said Steffen Reichold, an emerging-markets economist at Stone Harbor Investment Partners, which has $60 billion in assets under management.
Argentina’s battle with the hedge funds stems from the 2001 default on about $100 billion, which was the largest ever at the time. Since then, the Argentine government has managed to restructure about 93% of that debt, issuing new bonds to creditors.
4. HEDGE FUNDS WIN RULING IN ARGENTINA BOND CASE (The New York Times)
By Peter Eavis
August 23, 2013
A dogged group of hedge funds secured a significant victory in a federal appeals court on Friday in a case that is likely to have far-reaching effects on international bond markets, parts of the banking system and the struggling nation of Argentina.
The hedge funds, including one affiliated with the investment firm of the billionaire Paul E. Singer, bought a handful of bonds that Argentina’s government defaulted on early in the last decade. Their aim was to buy the debt for pennies on the dollar and then sue Argentina to press it to pay the bonds in full. A lower court judge ruled in their favor, and a three-judge panel of the United States Court of Appeals for the Second Circuit in New York upheld his decision.
The funds may not be in line for a big financial return on their high-risk bet, even after the court victory on Friday. But even if their wager never pays off, the funds’ litigation strategy is bringing important changes to the international market in which many countries borrow to finance their deficits and support their economies.
The litigation could also create a situation in which Argentina, led by President Cristina Fernández de Kirchner, chooses to default on billions of dollars of bonds, a move that would deepen the country’s economic problems. Argentina has employed prominent New York lawyers to fight its case. Mrs. Kirchner has often commented combatively on the case, calling the hedge funds “vultures.”
“This is legal history in the making,” said Arturo C. Porzecanski, a professor of international economics at the American University in Washington. “The ruling, as well as the entire Argentina litigation, is really setting precedent.”
The appeals court decision has its roots in a dark period of Argentina’s recent history. Reeling from a harsh economic slowdown, Argentina defaulted on nearly $100 billion of debt in 2001. In the years afterward, many of the country’s bondholders agreed to deals in which they received new “exchange” bonds that were worth a lot less than the original ones. Argentina has kept up with the payments on the exchange bonds since it issued them.
But some investors, known as holdouts, refused to join the exchange deals and demanded full repayment. This included Mr. Singer’s firm, Elliott Management, which has sued other developing countries to make money on defaulted bonds. In the Argentina case, it even persuaded a court in Ghana to seize an Argentine naval vessel.
The funds demanded that they be paid in full on $1.3 billion of defaulted Argentine bonds, and Judge Thomas P. Griesa of Federal District Court in New York ruled forcefully in their favor.
His ruling contained two crucial features. First, he said Argentina had to pay the holdouts on their defaulted bonds whenever it next made payments on the restructured bonds. And in a move that has few precedents, Judge Griesa came up with a way to potentially enforce his decision if Argentina chose to ignore it. He singled out the financial firms that pass the payments on the restructured bonds from the Argentine government to their holders. If these firms handled the payments, they could effectively find themselves in contempt of the court’s ruling.
Not wanting to break the law, the firms, like Bank of New York Mellon, would stop processing the bond payments. Mrs. Kirchner would then have to decide whether to pay the holdouts to clear the way for the payment-processing firms to funnel money to the holders of the exchange bonds or, in the alternative, default on the exchange bonds.
Though the appeals court sided with Judge Griesa, it delayed the enforcement of the decision while the Supreme Court decides whether to take the case.
“Today’s unanimous, well-reasoned decision appropriately condemns Argentina’s persistent violation of its obligations and its extraordinary defiance of the laws of the United States,” Theodore B. Olson, a partner at Gibson, Dunn & Crutcher, the law firm that is representing an affiliate of Elliott Management, said in a statement.
“This is another opportunity for my government to do what it should do and deal in good faith,” said Horacio Vázquez, a Buenos Aires native who leads a group of bondholders who want to be repaid in full.
Elliott bought some of its Argentine debt before the country’s 2001 default, according to a person familar with the fund’s actions.
One big question is whether the appeals court decision will disrupt the sort of debt reductions that can ease the economic burdens of some countries. Investors might be emboldened to take a tough line after seeing Elliott’s legal successes.
But the appeals court argued that this Argentina case was narrow in nature, suggesting that it may not apply in other defaults. “This case is an exceptional one with little apparent bearing on transactions that can be expected in the future,” Judge Barrington D. Parker wrote in the decision.
Legal specialists who think the Argentina case won’t have a wide effect have also noted that many bonds now have a special feature that make it much harder for hedge funds to hold out.
Still, bonds continue to have a so-called pari passu clause, from the Latin for “on equal footing,” which has been crucial in this case. The clause provided the legal basis for the courts to demand that the holdouts be paid when the holders of the exchange bonds are paid.
“Everyone who has a clause like this had better look at it very carefully,” Mitu Gulati, a law professor at Duke, said.
Perhaps the most jarring development is that the appeals court upheld the provisions that are designed to stop banks from passing on payments on the exchange bonds. The government debt market lacks an authority, like a bankruptcy court, that can sort out disputes between creditors and debtors. By effectively tying the hands of firms like Bank of New York Mellon, the United States courts could become such an enforcer.
“This is the revolution in this case,” Mr. Gulati said. “For the first time in hundreds of years of sovereign debt, a court is saying, ‘We’re going to go out there and improve the market by helping you to enforce it.’ ”
The odds of Argentina getting the Supreme Court to rule on the case do not look strong.
“On the one hand, just looking at these questions as questions of law, I don’t think the Supreme Court is likely to take it up,” Henry Weisburg, a partner at Shearman & Sterling, said. “But you do have to balance this against the fact that sovereign states do get deference from the Supreme Court.”
In Argentina, Mrs. Kirchner is likely to keep up her strong opposition to the hedge funds for the foreseeable future, which means they probably won’t get paid in full any time soon.
But political analysts are starting to doubt whether she can win the 2015 election. That could pave the way for a new president who may be more willing to settle with the holdouts.
5. ARGENTINA LOSES APPEAL OF RULING FORCING IT TO PAY BONDHOLDERS (Financial Times)
By Benedict Mander in Caracas and Robin Wigglesworth in London
August 23, 2013
Argentina on Friday lost an appeal of a US court ruling that would force it to pay $1.33bn to bondholders that rejected debt restructurings after its milestone 2001 default on nearly $100bn.
The decision represents an important victory for what Argentina disparagingly calls “vulture funds”. It also revives market fears that the South American country could be moving inexorably towards its second default in just over a decade. The dispute also has important implications for future sovereign debt restructurings.
The 2nd US Circuit Court of Appeals in New York said enforcement of the injunctions would be delayed pending resolution of an appeal to the US Supreme Court, which last year ordered Argentina to pay the so-called “holdout” bondholders. Earlier this year, Argentina asked the Supreme Court to review the case as it continues its dispute with the creditors led by Elliott, a US fund, who bought debt cheaply after the 2001 default and have been suing to collect in full.
“This will take time to resolve, and the politics could change before it is. The final chapter of this saga hasn’t been written yet,” said a lawyer with knowledge of the case.
Important midterm legislative elections will be held in Argentina on October 27, after President Cristina Fernández de Kirchner’s party suffered a major defeat in primary elections earlier this month. Ms Fernandez is now unlikely to secure the two-thirds majority needed to reform the constitution and enable her to stand for re-election when her term expires in 2015.
Observers believe that the Supreme Court is unlikely to look at the case until late September, and since it will have an impact on sovereign relations, it is possible that the court may ask the Solicitor-General for its opinion. The lawyer said that there would be “a ferocious lobbying battle” in Washington over what the Solicitor-General might say.
The price of Argentina’s bond maturing in 2033, which is affected by the ruling, fell from 66.12 cents on the US dollar before the ruling to 62.5 cents by midday in New York. The bond is very illiquid, but this equates to a yield of 14.49 per cent.
“The court did what was politically correct: uphold New York Law by ruling against Argentina but granting a stay that had not been asked pending appeal at the Supreme Court. Thus, whatever impact this may have on the market, it will be on the shoulders of the Supreme Court,” said Marcelo Etchebarne, an Argentine lawyer who has been following the case closely.
The development follows the cancellation last month of plans by the International Monetary Fund to support Argentina’s push for a US Supreme Court review of the case, after the US made clear that it would not support the move.
The IMF’s planned intervention was driven by concerns about the implications for future sovereign restructurings, although some experts argue that Argentina’s case is so unusual that there would be no knock-on effects.
Argentina’s first bond restructuring took place in 2005. In that, and a second debt swap in 2010, Argentina restructured some 93 per cent of its defaulted debt with a steep writedown.
6. DEADBEATS DOWN SOUTH (The Wall Street Journal)
24 August 2013
While President Obama was suggesting new ways for college students to avoid paying their bills this week, a federal court was sending a different message. On Friday the Second Circuit Court of Appeals ruled that a contract is still a contract, even if one party is a government. This means that President Cristina Kirchner will have to honor the promises that Argentina made to U.S. investors.
Argentina’s 2001 default on roughly $100 billion in debt was at the time the largest sovereign default in history. The spendthrift government offered creditors roughly 30 cents on the dollar in restructuring deals in 2005 and 2010. Figuring that Argentina’s left-wing populist government was unlikely to offer better terms to foreign bondholders, more than 90% of these investors accepted the offers.
But holdouts including a subsidiary of Paul Singer’s Elliott Management reasonably argued that Argentina should repay in full. Argentina ignored the holdouts and has refused to pay them a nickel of the more than $1 billion in principal and interest due on roughly $4 billion of Argentine debt. Buenos Aires began making the reduced payments only to the investors who had accepted the haircuts.
Argentina’s problem is that the bond contracts the government freely accepted specifically said that all bondholders must be treated equally. Friday marks at least the third time a U.S. court has reminded Argentina that it cannot pay some investors while stiffing others.
Along the way, the Argentine government has also tried to claim sovereign immunity under U.S. law, which would prevent U.S. investors from seizing the assets of a foreign government to enforce a contract. But U.S. judges keep reminding Argentina that it voluntarily waived that immunity in its bond contracts. No doubt Buenos Aires understood it could borrow the money at attractive rates only if it gave investors some reason to believe they might be repaid.
Friday’s ruling sends a welcome message that investors can lend to foreign governments and know that their rights will be upheld. It provides an equally helpful reminder for sovereign governments that they will be held accountable for their obligations.
While the International Monetary Fund and others predicted chaos in future loan restructurings if the holdouts won in court, sovereign bond markets shrugged off Friday’s decision. The truth is most bond deals now include collective-action clauses, so a super-majority of lenders will set the rules for everyone. That takes nothing away from the gratifying legal message that Argentina’s government can’t treat U.S. investors as contemptuously as it so often treats its own citizens.
7. COURT RULES IN DEBT DEFAULT; ARGENTINA MUST PAY FULL AMOUNT TO ONE GROUP OF INVESTORS, JUDGES DECIDE (Los Angeles Times)
By Ken Bensinger
24 August 2013
Argentina’s long slugfest with Wall Street over its sovereign debt default — the largest ever — has left the South American nation unbowed after losing another round in U.S. courts.
A federal appeals court ruled Friday that Argentina must pay a group of bond investors more than $1.3 billion, the full amount of principal and interest, if it wants to continue making discounted payments that other creditors have agreed to accept.
Argentina has publicly vowed to never pay face value on those notes, so the unanimous decision by the three-judge panel of the U.S. 2nd Circuit Court of Appeals could force a default on the country’s other debts.
However, the court stayed its ruling to allow the U.S. Supreme Court to decide whether to hear an appeal from Argentina in a related case. Yields on Argentine bonds fell slightly after the ruling, reflecting the fact that the stay at least buys more time for the country.
The heated dispute between the nation of 40 million and a group of investors led by hedge funds Elliott Management and Aurelius Capital Management has drawn wide attention in the world of international finance, where it has been called “the trial of the century.”
Argentina’s supporters, a group that includes the International Monetary Fund and France, have expressed concerns that the ruling could make it more difficult for poor countries to restructure unmanageable debt load.
Many on Wall Street, meanwhile, argue that a victory for Argentina would undermine confidence in U.S. markets and potentially shake the international bond markets.
The decision, which upholds a District Court ruling in November, “confirms that Argentina is not above the law,” said Theodore B. Olson, a lawyer who represents the investors.
He and his clients have argued that Argentina has consistently defied laws in New York State and elsewhere in its refusal to pay the old debts.
The fight was triggered by Argentina’s record default on nearly $100 billion in bonds in late 2001. Although the country was able to restructure most of that debt to pay investors at a discount, a small group holding about 7% of the total value refused to consent to the deal.
Those holdouts sued Argentina in various courts, demanding the full amount of their investment, plus interest.
Some have attempted creative measures to recover value, at one point persuading a judge in Ghana to seize an Argentine warship at port in a bid to extract a ransom.
The ship, La Libertad, was ultimately released, and the holdouts have had difficulty recovering any value on their investment. Elliott, which was not an original investor, has declined to say how much it spent on the secondary market to acquire defaulted Argentine debt.
In the 2nd Circuit ruling, Judge Barrington Parker wrote that the “decision does no more than hold Argentina to its contractual obligation of equal treatment,” and he noted that the court believed the case was unique and would not affect other debt matters.
In June, Argentina filed a separate petition asking the U.S. Supreme Court to review a lower court ruling that barred the country from making debt payments to other investors without also paying holdouts.
Critics of the ruling have argued that it will encourage investors like Elliott and Aurelius to refuse offers to restructure debts in the future.
“Today’s ruling means that these funds will more aggressively target poor countries and struggling economies,” said Eric LeCompte, executive director of Jubilee USA Network, a faith-based nonprofit group that fights global poverty.
The IMF and the U.S. Treasury have spoken out against the court decisions, even as they have criticized Argentina for its handling of the acrimonious dispute. Most recently, France, in a brief filed to the Supreme Court in July, said the lower court ruling would “threaten international financial stability.”
Investors who accepted the discount deal have taken Argentina’s side as well, arguing that an adverse ruling could hurt their interests.
That’s because Argentina’s president, Cristina Fernandez de Kirchner, has vowed to never pay the holdouts a cent more than paid to those who took the deal. And because the court ruling would require Argentina to pay the holdouts at the same time as it pays other debtors, it would probably enter into default.
Argentina has not publicly commented on Friday’s ruling.
The high court, which is not in session, has not yet said whether it will hear the petition the nation filed in June.
8. ARGENTINA LOSS BRINGS END OF DEFAULTED BOND FIGHT CLOSER (Bloomberg News)
By Bob Van Voris
August 24, 2013
Argentina lost its appeal of a ruling that would force it to pay in full holders of $1.5 billion in its defaulted debt when it makes a payment to investors who took discounted restructured bonds, leaving the unlikely prospect of a Supreme Court appeal as its last hope.
The U.S. Court of Appeals in New York said it would delay the effect of its ruling until the high court decides whether to review the case. Argentina’s restructured bonds fell after the ruling was released.
A three-judge appeals court panel, referring to the nation as “a uniquely recalcitrant debtor,” rejected Argentina’s arguments that a ruling in favor of the defaulted debt-holders, led by billionaire hedge fund manager Paul Singer’s Elliott Management Corp. and Aurelius Capital Management LP, would violate its sovereignty and expose it to a fresh financial crisis by threatening a default of the new bonds.
Argentina has vowed never to pay holders of its defaulted bonds, whom the country’s leaders have called “vultures,” and its legislature passed a law in 2005 barring payment of the defaulted bonds. Yesterday’s ruling leaves Argentina with the unlikely prospect of persuading the appeals court to overrule itself or the Supreme Court to consider the case.
Norma Madeo, spokeswoman for Argentina’s Economy Ministry, didn’t return a phone call seeking comment on the ruling.
Glossing Over
“Today’s opinion unfortunately glosses over the inequitable impact of the injunction on the exchange bondholders’ constitutionally protected property rights,” Sean O’Shea, a lawyer for holders of the restructured bonds said yesterday in a statement. “We look forward to the opportunity to present the exchange bondholders’ position to the Supreme Court.”
Argentina in 2001 defaulted on a record $95 billion of foreign debt. Holders of about 91 percent of the bonds agreed to take new exchange bonds in 2005 and 2010, at a deep discount.
A group of holdout investors had asked the appeals court to uphold rulings by U.S. District Judge Thomas Griesa in Manhattan that they said give them the ability to collect the $1.5 billion they said they’re owed.
In ruling for the holdouts, the court yesterday rejected Argentina’s predictions of economic disaster.
“What the consequences predicted by Argentina have in common is that they are speculative, hyperbolic and almost entirely of the republic’s own making,” U.S. Circuit Judge Barrington Parker wrote in yesterday’s opinion.
Deep Discount
Argentina’s restructured dollar bonds due in 2033 fell 1.64 cents to 59.66 cents on the dollar yesterday in New York after earlier rising to 62.03 cents, according to data compiled by Bloomberg. Yields on the securities climbed 0.41 percentage point to 15.07 percent. The extra yield investors demand to own Argentine bonds over U.S. Treasuries rose 0.49 percentage point to 10.72 points, according to JPMorgan Chase & Co. (JPM) data.
“I don’t think there’s any good news in this for Argentina,” said Bruce Wolfson, a lawyer with the firm Bingham McCutchen LLP who has been following the litigation. “The court apparently went down the line and affirmed all of Judge Griesa’s rulings.”
Wolfson said the odds are “very long” that the Supreme Court will agree to hear the case.
The court yesterday rejected Argentina’s arguments that a ruling against it would hamper future efforts by overwhelmed debtor nations to restructure their debt. Parker said Griesa was justified in tying payment of the defaulted bonds to the restructured debt payments because Argentina had made clear “its intention to defy any money judgment issued by this court.”
‘Persistent Violation’
Yesterday’s ruling “appropriately condemns Argentina’s persistent violation of its obligations and its extraordinary defiance of the laws of the United States and the orders of U.S. courts,” Theodore Olson, a lawyer for Elliott, said in an e-mailed statement.  “It confirms that Argentina is not above the law.”
Bank of New York Mellon Corp., the indenture trustee for Argentina’s restructured bonds, argued in the appeal that it shouldn’t be forced to halt payments to holders of the bonds if Argentina refuses to obey Griesa. The court yesterday agreed with Griesa’s ruling that BNY Mellon and other institutions involved in the restructured bond payments can’t act in concert with Argentina to violate his orders.
Argentina has spent the past decade opposing claims brought in U.S. courts by holders of the defaulted bonds.
Clinton, Bush
The case was argued before the appeals court in February. The judges on the appeals panel were Rosemary Pooler, appointed by President Bill Clinton, a Democrat; Reena Raggi and Parker, both named to the court by George W. Bush, a Republican.
Many holders of the defaulted Argentina bonds have won U.S. court rulings requiring the country to pay them. Despite those rulings, courts have generally prevented them from moving to seize the country’s assets, citing the Foreign Sovereign Immunities Act.
That law limits the ability of plaintiffs to sue foreign countries in U.S. courts. Argentina has asked the U.S. Supreme Court to review the case based in part on that law.
On Oct. 26, the appeals court upheld a ruling by Griesa that could allow Elliott Management’s NML Capital and other bondholders to collect, indirectly, by blocking the nation from paying the restructured debt without also paying the defaulted bonds.
Equal Treatment
The appeals court in October affirmed Griesa’s ruling that an equal treatment, or pari passu, clause in the original bond agreements prevents Argentina from treating defaulted bondholders less favorably than exchange bondholders. The appellate court upheld an injunction issued by Griesa that barred Argentina from paying the exchange bondholders without also paying holders of defaulted debt.
In the October ruling, the appeals court asked Griesa to explain how his orders affected third parties, including banks and payment intermediaries. It also asked Griesa to clarify the formula that would be applied to calculate payments to the holders of defaulted bonds.
“Our decision affirms a proposition essential to the integrity of the capital markets: borrowers and lenders may, under New York law, negotiate mutually agreeable terms for their transactions, but they will be held to those terms,” Parker said in his opinion yesterday.
“We believe that the interest — one widely shared in the financial community — in maintaining New York’s status as one of the foremost commercial centers is advanced by requiring debtors, including foreign debtors, to pay their debts,” he said.
The case is NML Capital Ltd. v. Republic of Argentina, 12-00105, U.S. Court of Appeals for the Second Circuit (New York).
9. ARGENTINE BONDS RISE AS U.S. COURT DELAYS ORDER TO PAY HOLDOUTS (Bloomberg News)
By Katia Porzecanski and Camila Russo
August 23, 2013
Argentina’s overseas bonds gained after a U.S. appeals court said it will delay the effects of a ruling that forces the nation to pay holdout creditors from its 2001 default in full pending a decision by the Supreme Court.
Argentina’s restructured dollar bonds due in 2033 gained 1.1 cent to 64.28 cents on the dollar at 10:49 a.m. in New York, according to data compiled by Bloomberg. Yields on the securities fell 0.25 percentage point to 13.97 percent.
The court rejected Argentina’s appeal of a ruling that would force it to pay holders of $1.5 billion in defaulted bonds, led by hedge fund Elliott Management Corp., when it makes payments on its restructured debt. The effects of the ruling will be delayed while Argentina, which has vowed to never repay holders of defaulted bonds in full, asks the U.S. Supreme Court to review the case, and until the high court decides to accept the request.
“Prices held because the stay means that even if the decision was negative for Argentina things will remain as they are until the Supreme Court decides whether it’ll take the case,” Jorge Piedrahita, chief executive officer of Torino Capital LLC, said by telephone from New York.“It means that the next bond payments are safe.”
The extra yield investors demand to hold Argentine debt over U.S. Treasuries fell 14 basis points to 1,009 basis points, according to JPMorgan Chase & Co.’s Global EMBI Diversified index.
Argentina in 2001 defaulted on a record $95 billion of foreign debt. Holders of about 91 percent of the bonds agreed to take new exchange bonds in 2005 and 2010, at a deep discount.
Argentina argued that a ruling in the defaulted bondholders’ favor would violate its sovereignty and expose it to a new financial crisis. Bank of New York Mellon Corp., the indenture trustee for restructured bonds, said it shouldn’t be forced to halt payments to holders of those bonds if Argentina refused to comply with a court order to pay the defaulted bonds.
10. ARGENTINA SAYS TO CONTINUE PAYING DEBTS ON SAME TERMS:TELAM (Reuters News)
By Brad Haynes
August 25, 2013
(Reuters) – Argentina will continue paying bondholders on the same terms, its economy minister told state news agency Telam on Saturday, after losing an appeal in its legal battle with creditors who rejected past restructurings of the country’s defaulted debt.
The 2nd U.S. Circuit Court of Appeals upheld a judge’s order on Friday requiring Argentina pay $1.33 billion to hedge funds still fighting the country over its record sovereign debt default more than a decade ago.
“We’re going to keep paying as we have until now, on the same terms,” Economy Minister Hernan Lorenzino told Telam, calling the court ruling “an attempt to bring the country back to 2001.”
The appeals court held off enacting its decision while the U.S. Supreme Court weighs whether to take up the case, bringing short-term relief to investors concerned about another default.
The 93 percent of bondholders who renegotiated debts after Argentina’s $100 billion default, accepting less than 30 cents on the dollar, worry the refusal to pay holdouts in the face of court orders could freeze payment on restructured bonds as well.
Dissident bondholders led by Aurelius Capital Management and NML Capital Ltd, a unit of Paul Singer’s Elliott Management Corp, are demanding payment in full. They have argued that Argentina can’t deny them their due while paying investors who agreed to restructurings in 2005 and 2010.
11. ARGENTINA LOSES APPEAL IN BATTLE WITH HOLDOUTS, ORDER STAYED PENDING US SUPREME COURT RESOLUTION (Business News Americas)
23 August 2013
The US second circuit court of appeals has rejected Argentina’s appeal against judge Thomas Griesa’s order at the US southern district court of New York from October 26, 2012, and upheld the ratable formula decision enjoining BNY Mellon and other third parties.
At the same time the court stayed Griesa’s order giving time for Argentina to submit a new writ of certiorari (petition to be heard) to the US supreme court.
This latest decision by the US court in a legal battle between hedge funds led by NML Capital, a unit of Elliott Management, and Argentina has continued for over a decade following the 2001 financial crisis in the country, and now looks set to continue into 2014.
The appeals court held that “by defaulting on the bonds, enacting legislation specifically forbidding future payment on them, and continuing to pay interest on subsequently issued debt, Argentina breached its promise of equal treatment.”
The appeals court criticized Argentina’s repeated announcements of their intentions to defy any rulings by the US courts, but stated that “in view of the nature of the issues presented, we will stay enforcement of the injunctions pending resolution of a timely petition to the Supreme Court for a writ of certiorari.”
Furthermore, the court rejected arguments that its decision will have an adverse impact on New York’s status as a financial center, adding “we do not believe the outcome of this case threatens to steer bond issuers away from the New York marketplace.”
“On the contrary,” added the court, “our decision affirms a proposition essential to the integrity of the capital markets: borrowers and lenders may, under New York law, negotiate mutually agreeable terms for their transactions, but they will be held to those terms. We believe that the interest – one widely shared in the financial community – in maintaining New York’s status as one of the foremost commercial centers is advanced by requiring debtors, including foreign debtors, to pay their debts.”
In a response to questions from BNamericas, Elliott Management’s lawyer at law firm Gibson Dunn, Theodore B. Olson, commented, “Today’s unanimous, well-reasoned decision appropriately condemns Argentina’s persistent violation of its obligations and its extraordinary defiance of the laws of the United States and the orders of U.S. courts. It confirms that Argentina is not above the law.”
However, a statement from the Exchange Bondholders Group and Gramercy Funds Management lamented the opinion of the court of appeal.
“Today’s opinion unfortunately glosses over the inequitable impact of the injunction on the Exchange Bondholders’ constitutionally protected property rights,” said Sean O’Shea of O’Shea Partners, co-counsel with Boies, Schiller & Flexner LLP.
The statement continued, “We look forward to the opportunity to present the Exchange Bondholders’ position to the supreme court.”
According to Henry Weisburg of law firm Shearman & Sterling, the decision was in line with his firm’s expectations.
“We need to run some numbers but it is almost certain that the injunction will not take effect this year and there will be a Cert petition in due course and then we will find out in the first quarter of next year probably whether Cert will be granted, which again I think is unlikely,” added Weisburg.
In summary, a decision on the current pending certiorari regarding the reach of the foreign sovereign immunity act (FSIA) is likely to come in October of this year. A new certiorari petition is now expected with respect to the issues decided today, meaning the legal machine will continue rolling, with no default as yet.
12. ARGENTINA LOSES U.S. APPEAL IN $1.33 BILLION BONDHOLDER FIGHT (HedgeWorld News)
23 August 2013
NEW YORK (Reuters)—Argentina on Friday [Aug. 23] lost its appeal of a U.S. judge’s order requiring that it pay $1.33 billion to bondholders who refused to participate in two debt restructurings after the country’s $100 billion default more than a decade ago.
But the 2nd U.S. Circuit Court of Appeals in New York delayed implementing the decision pending a ruling by the U.S. Supreme Court.
The appeals court’s decision marked a major victory for the so-called “holdout” bondholders, led by NML Capital Ltd., a unit of billionaire hedge fund manager Paul Singer’s Elliott Management Corp., and Aurelius Capital Management.
U.S. Circuit Judge Barrington Parker, writing for the three-judge panel, said the court believed “it is equitable for one creditor to receive what it bargained for, and is therefore entitled to, even if other creditors, when receiving what they bargained for, do not receive the same thing.”
“Because the district court’s decision does no more than hold Argentina to its contractual obligation of equal treatment, we see no abuse of discretion,” he added.
The appellate ruling upheld a November 2012 decision that required Argentina to pay the money into a court-controlled escrow account by the time of its next interest payment to the bondholders who agreed to swap their debt in 2005 and 2010.
Dissident bondholders have long argued that Buenos Aires continues to defy U.S. law by not paying them in full. Argentina has said that if it is forced to pay the dissidents, then future sovereign restructurings would be impossible to hammer out.
Argentina has called holdouts like NML and Aurelius “vultures.” About 93 percent of the country’s bonds were restructured, with creditors receiving 25 cents to 29 cents on the dollar.
In October 2012, the 2nd Circuit said Argentina violated an equal treatment clause in the contracts governing its bonds.
In November, U.S. District Judge Thomas Griesa ordered Argentina to pay $1.33 billion owed to the holdout bondholders into an escrow account before making its next interest payment to creditors who participated in the restructurings.
The case is NML Capital Ltd. et al v. Republic of Argentina, case No. 12-105, in the 2nd U.S. Circuit Court of Appeals.
13. ATFA WELCOMES SECOND CIRCUIT RULING IN ARGENTINA DEBT CASE (Business Wire)
23 August 2013
Ruling clears way for fair resolution of Argentina’s debt obligations to U.S. citizens
WASHINGTON–(BUSINESS WIRE)–August 23, 2013–   The American Task Force Argentina (ATFA) welcomes a ruling from the U.S. Court of Appeals for the Second Circuit that upholds the rule of law and reinforces the principle that the law applies equally to all parties that submit to the judgment of U.S. courts.
Regarding the Court’s ruling, ATFA Executive Director Robert Raben made the following statement:
“Today’s unanimous, well-reasoned decision is a victory for the rule of law and the enforcement of contracts in the United States.”
“In order to raise billions of dollars at inexpensive rates in the U.S. financial markets, Argentina promised in its bond contract to submit to the jurisdiction of U.S. courts, adhere to New York law and waive its sovereign immunity. Since defaulting on those bonds in 2001, Argentina has ignored those promises, waged a vicious campaign against its creditors, and resisted every attempt by creditors to engage in good-faith negotiations. ATFA hopes that Argentina will see today’s ruling as motivation to resolve its financial obligations through good-faith negotiations and discontinue its defiance of court judgments and the rule of law.”
The Second Circuit’s decision directly addressed Argentina’s uniquely defiant and disorderly treatment of its unpaid creditors and U.S. courts. The decision cited Argentina’s threats to pay “not one dollar” to its unpaid creditors and to “not voluntarily obey” the Court’s orders, despite being fully able to pay. “It is within this context that we review the amended injunctions for abuse of discretion and, finding none, we affirm,” the Court wrote.
Importantly, the Court rejected Argentina’s claims that upholding the lower court’s orders would force it to default on its current debt. The Court cited the lower court’s finding that Argentina “has the financial wherewithal” to pay both holders of its current debt and holders of its defaulted debt. The Court rightly decided that it was “unwilling to permit Argentina’s threats to punish [holders of its current debt] to dictate the availability or terms of relief [available to holders of its defaulted debt].”
The Court also rejected Argentina’s claims that upholding the lower court’s orders would have a negative impact on future sovereign restructurings. The Court called these claims, “speculative, hyperbolic, and almost entirely of the Republic’s own making.” The Court called this case “an exceptional one with little apparent bearing on transactions that can be expected in the future.”
In fact, this ruling should serve to increase global economic stability by discouraging sovereigns from attempting to follow what the ratings agency Moody’s called Argentina’s “unique[ly] unilateral and coercive approach to debt restructuring.”
The Second Circuit appeared to agree, observing that “cases like this one are unlikely to occur in the future because Argentina has been a uniquely recalcitrant debtor,” among other reasons.
Today, ATFA renews its calls for Argentina to sit down with its creditors and reach a fair resolution of its defaulted debt.
American Task Force Argentina (ATFA) | 888-662-2382 | media@atfa.org | SOURCE: American Task Force Argentina (ATFA)
14. FACTBOX – ARGENTINA’S UPCOMING PAYMENTS ON FOREIGN-CURRENCY BONDS (Reuters News)
23 August 2013
BUENOS AIRES, Aug 23 (Reuters) – Argentina on Friday lost its appeal of a U.S. judge’s order requiring that it pay $1.33 billion to bondholders who refused to participate in two debt restructurings after the country’s $100 billion default more than a decade ago. The Second U.S. Circuit Court of Appeals put enforcement of injunctions against Argentina on hold pending resolution of the country’s appeal to the U.S. Supreme Court, delaying the specter of a possible default. The following is a list of interest and amortization payments coming due in the remainder of 2013 on Argentina’s foreign-currency bonds, according to Argentine data. All amounts are in dollars unless otherwise specified.
     
BONDS GOVERNED EITHER BY NEW YORK OR ARGENTINE LOCAL LAW*
           Next payment due         Amount             Maturity
                                    Outstanding**
 Par         Sep 30      $83.68 mln      $5.394 bln    Dec 2038
 Discount    Dec 31      $302.39 mln
    BONDS GOVERNED BY NEW YORK LAW
            Next payment due
Global 17   Dec 2      $42.25 mln
    BONDS GOVERNED BY BRITISH LAW
             Next payment due            Amount       Maturity
                                         Outstanding**
 Par         Sep 30    73.15 mln euros   $8.188 bln   Dec 2038
 Discount    Dec 31   151.94 mln euros
    BONDS GOVERNED BY JAPANESE LAW
             Next payment due             Amount      Maturity
                                          Outstanding**
 Par         Sep 30      48.70 mln yen    $273 mln    Dec 2038
 Discount    Dec 31     145.45 mln yen
    BONDS GOVERNED BY ARGENTINE LAW
               Next payment due           Amount       Maturity
                                          Outstanding**
 Bonar VII     Sep 12     $2.070 bln      $2.000 bln   Sep 2013
 Bonar 2019    Sep 15     $43.26 mln        $961 mln   Mar 2019
 Par           Sep 30       **            $1.301 bln   Dec 2038
 Boden 2015    Oct 03    $203.62 mln      $5.818 bln   Oct 2015
 Bonar X       Oct 17    $223.92 mln      $6.398 bln   Apr 2017
 Bonar 2018    Nov 29    $151.85 mln      $3.374 bln   Nov 2018
 Discount      Dec 31       **
  Source: Argentine Economy Ministry and the Argentine Institute
of Capital Markets
   *The Argentine Economy Ministry data does not distinguish
between how much of these dollar-denominated Par and Discounts
are governed by either New York or Argentine law.
   ** Amount outstanding as of June 30, 2012
15. ARGENTINE MINISTER SAYS WON’T CHANGE PLANS TO PAY HOLDOUT CREDITORS (Dow Jones Global Equities News)
By Taos Turner
25 August 2013
BUENOS AIRES–Argentine Economy Minister Hernan Lorenzino on Sunday reaffirmed the government’s position that it won’t pay so-called holdout creditors more than it pays other investors who accepted earlier debt restructuring.
“That policy is not going to change,” Mr. Lorenzino said in an interview on a state-run television program.
The comments come two days after a U.S. appeals court ruled in favor of holdout creditors and their request that the Argentine government pay them the full value of bonds that Argentina defaulted on over a decade ago.
The U.S. Second Circuit Court of Appeals in New York ruled that if Argentina keeps paying creditors who accepted a discounted restructuring offer, then it also must pay a group of holdout bondholders 100% of the roughly $1.33 billion they are owed in principal and accrued interest.
Mr. Lorenzino said the government will continue to honor its obligations to those who accepted the terms of the restructuring but that it will not pay holdout investors “anything distinct” from that.
While the appeals court ruled against Argentina, it delayed implementation of its ruling until the U.S. Supreme Court decides whether to review the case.
Argentina’s more than decade-long legal battle with creditors stems from its decision to stop paying about $100 billion of debt in 2001. The country later restructured about 93% of that debt by offering investors 33 cents on the dollar.
Holdout creditors, which include Elliott Management Corp.’s NML Capital Ltd. and Aurelius Capital, have argued that Argentina has the money to pay its debts but chooses not to do so.
16. ARGENTINA’S FERNÁNDEZ COULD TURN TO TAX CUTS, CABINET CHANGES TO BOOST POPULARITY (Business News Americas)
23 August 2013
Argentina’s President Cristina Fernández is likely to lower income taxes and may also undertake a cabinet reshuffle to boost her government’s popularity ahead of the mid-term congressional elections in October as well as the presidential elections in 2015, said Barclays Capital in a research note.
Fernández on Wednesday (Aug 21) held a meeting with the country’s main economic stakeholders, including unions, industrialists and bankers, and earlier had delivered a televised speech.
“In our opinion, the two events support our view that the administration is seeking to shift to policies aimed at stabilizing the economy (reserves, growth and inflation) in the next two years to pave the way for October 2015 presidential elections,” said Barclays.
During the meeting, Fernández had confirmed that she possessed the “political will” to reduce income taxes, but raised doubts over how such a measure would be financed. Taxing capital gains from stock trading and increasing taxation on local banks were two options that were mentioned.
Barclays said that it sees a reduction in income taxes as “extremely likely” before the congressional elections on October 27 given the positive impact it would have on the middle class. Such a move would also ease future negotiations with the unions – which are critical to contain Argentina’s high inflation – and take away some of the political opposition’s firepower.
The congressional primaries that Argentina held on August 11 turned out to be a major defeat for Fernández and her ruling party Frente para la Victoria (FPV), which only obtained 26.3% of the national vote and lost ground in several key provinces.
As a confidence boost, Barclays believes that Fernández could also make trade minister Guillermo Moreno retire or reduce his responsibilities “given that he is widely perceived as out of step with the much-needed changes in economic policies.”
“In our view, the most likely scenario is one of political change in October 2015. Two years is a long time and the president seems to agree that the economy needs some fixes,” Barclays said, while concluding that “Should the authorities follow through and walk the way they are starting to talk, this should mean lower net outflows on the external front, more growth and less likelihood of union unrest down the road.”
 
17. ARGENTINA BANS FOUR U.K. OIL FIRMS  (Dow Jones Top News & Commentary)
By Taos Turner
23 August 2013
Argentina has banned four London-based oil companies from doing business in the South American country for 20 years, saying the firms broke Argentine law by operating near the U.K.-controlled Falkland Islands.
Argentina’s government accused the companies of developing oil and gas resources near the islands without its permission. Argentina claims sovereignty over the islands and refers to them as Las Malvinas.
The ban, which was published in a series of presidential decrees Friday, applies to Borders & Southern Petroleum PLC (BOR.LN), Desire Petroleum PLC (DES.LN), Argos Resources Ltd. (ARG.LN) and Falkland Oil & Gas Ltd. (FOGL.LN).
None of the firms is thought to be engaged in any significant business activities in Argentina, though the companies couldn’t be reached immediately for comment.
In recent years, Argentine President Cristina Kirchner has pressed Argentina’s claims to ownership of the islands, which energy-industry analysts say may be home to abundant oil and gas reserves.
The islands in the South Atlantic have been under British control since the 1830s, when the U.K. displaced a precarious Argentine settlement. Argentina has long claimed that the islands still belong to it.
In April 1982, Argentina’s military government invaded the islands. The U.K. took back the archipelago after a 74-day war in which 649 Argentine and 258 U.K. soldiers died.
Relations between Argentina and the U.K. worsened notably in 2010, when U.K.-listed oil companies began exploring for oil and gas in waters surrounding the islands.
In 2011, at Argentina’s urging, countries belonging to the South American customs union, known as Mercosur, said they would block ships flying flags from the Falklands from dropping anchor in their ports.
Last year, tensions rose again when Argentina’s government urged local companies to stop importing goods from the U.K. The Argentine government also said last year it would pursue criminal and civil charges against oil-rig drillers, services companies and even banks that offered any type of financial analysis or assistance to firms operating near the islands.
Earlier this week tensions escalated amid media reports that Argentina’s ambassador to the U.K., Alicia Castro, called British Prime Minister David Cameron “dumb” and said he had dealt “foolishly” with the dispute over the islands. She later said her comments were taken out of context and that she hadn’t meant to offend the prime minister.
The presidential decrees against the oil companies also apply to individuals who have worked with companies involved in commercial activity near the islands. Any person deemed guilty of breaking related Argentine law could be banned from working in Argentina for between five and 20 years.
18. ARGENTINA BANS FOUR COMPANIES FROM ITS BORDERS FOR FALKLANDS WORK (Platts Commodity News)
By Charles Newbery
23 August 2013
Buenos Aires (Platts)–23Aug2013/344 pm EDT/1944 GMT   Argentina’s government said Friday it had banned four UK-based companies from operating within its borders for 20 years because they failed to get its permission before drilling in contested waters around the Falkland Islands in the South Atlantic.
The banned companies are Argus Resources, Borders and Southern Petroleum, Desire Petroleum and Falkland Oil and Gas, the Energy Secretariat said in a statement.
The companies drilled for oil and gas in areas around the Falklands “without authorization issued by the competent authorities” of Argentina, a violation of national law, it said.
Argentina argues that the Falkland Islands and the waters around it are part of its continental shelf.
The agency said that it had warned the companies of pending administrative, court and legal action. It added that the companies have 10 days to present their defense against the ban.
Argentina argues the four firms and other UK-based companies are carrying out exploration in the island chain’s waters in violation of Argentinian and international law and a United Nations resolution barring such activities while the question of sovereignty remains unresolved.
Argentina and Britain fought a brief war over the islands in 1982 and relations have remained tense on the sovereignty issue since then, with no talks on the issue taking place.
The situation worsened in 2010 when UK companies started drilling in waters near the islands, which Argentina calls the Islas Malvinas.
Premier Oil, another British firm operating in the contested waters, said in July 2012 that its Sea Lion prospect has the potential to produce 50,000 b/d of crude.
Most of the investment by the UK companies has been in exploring areas around the islands through seismic surveys and exploratory drilling, with Sea Lion showing potential for commercial production.
Premier Oil, which entered the prospect by buying a 60% stake from Rockhopper Exploration in 2012, plans to drill three exploratory wells by the end of 2014 or in early 2015.
Falkland Oil and Gas plans to process seismic data by the end of 2013 to determine where new well locations should be after drilling two in 2012 that found potential in the South and East Falkland Basins.
Desire is seeking investors for further exploratory and appraisal drilling on in the North Falkland Basin in late 2014. Argos is also targeting the North Falkland Basin, where it has identified potential resources of 3.1 billion to 10.4 billion barrels of hydrocarbons.
Borders & Southern is focused on the South Falkland Basin, where it has drilled two exploratory wells and one gas condensate discovery that shows potential for a 200 million barrel development.
The Falkland Islands is a UK self-governing overseas territory. In a March referendum, residents of the Falklands voted to remain British. The British government argues that their position should be respected.

==============================================================

TUESDAY, AUG 20TH

1. ARGENTINA REOPENS DEBT SWAP FOR SECOND TIME (The Wall Street Journal)
By Taos Turner
August 26, 2013
The decision follows an adverse ruling in a New York court last week.
BUENOS AIRES—Argentina’s government will reopen a 2005 debt swap for a second time after an adverse ruling in a New York court last week.
The move, unveiled by President Cristina Kirchner Monday, comes as the government deals with the fallout from a U.S. court decision last week that ordered Argentina to pay a group of so-called holdout bondholders 100% of the roughly $1.33 billion they are owed in principal and accrued interest.
The Kirchner administration has refused to pay the holdouts, saying they don’t deserve 100% of what they are owed under U.S. law. Argentina defaulted on its debt at the end of 2001, and in 2005 and 2010 it offered to pay bondholders only a third of what they were owed on the defaulted debt.
Though 93% of bondholders eventually accepted Argentina’s terms, others, such as the group of holdouts who were favored in last week’s decision, held out hope for a better offer.
The offer never came, and Mrs. Kirchner indicated Monday that her government wouldn’t comply with the court order, even if it is upheld by the U.S. Supreme Court.
The move to reopen the debt-restructuring process for a second time appears aimed at ensuring that Argentine payments to overseas bondholders don’t get embargoed by the U.S. court.
Argentina will invite investors holding foreign-law bonds to swap them for new debt that would be paid under local legislation in Argentina.
Offering bondholders the option of collecting on their debt in Argentina could avoid that risk.
“This shows our profound commitment to paying our debt to bondholders,” Mrs. Kirchner said in a televised speech.
Mrs. Kirchner said her government is deeply committed to paying its debt and that the U.S. appeals-court decision “is a bit unfair to Argentina.”
“The government is a serial payer but not a serial debtor,” Mrs. Kirchner said, putting a twist on the notion that Argentina is a “serial defaulter.”
By reopening the debt swap, Argentina is also giving the 7% of bondholders who didn’t participate in the previous debt restructurings an opportunity to do so now.
While the appeals court ruled against Argentina, it delayed implementation of its decision until the U.S. Supreme Court can decide whether to review the case.
“The decision of the U.S. Supreme Court will affect not only Argentina but the entire financial world,” Mrs. Kirchner said, indicating that such a ruling could make it harder for other countries to restructure their debts in the future.
2. ARGENTINE PRESIDENT, SPURNING US COURTS, SAYS HOLDERS OF BAD DEBT CAN COLLECT IN BUENOS AIRES (The Washington Post)
By Michael Warren
August 26, 2013
BUENOS AIRES, Argentina — Argentina’s president revealed Monday night how she’ll try to defy U.S. courts that have ruled against her government in a decade-long, billion-dollar legal fight over debts that have been unpaid since the country’s world-record, $100 billion default.
Rather than comply with Friday’s unanimous ruling ordering her government to pay $1.4 billion in cash to a group of plaintiffs she calls “vulture funds,” President Cristina Fernandez is proposing another debt swap: offering new bonds to be paid in dollars in Buenos Aires to anyone still holding defaulted debt.
Fernandez made the announcement in a surprise address to the nation, saying the U.S. federal appellate judges were unfair to label Argentina a deadbeat. She said Argentina has made $173 billion in debt payments since 2003 and will pay $2 billion more on Sept. 12.
“Rather than ‘recalcitrant debtors,’ we are serial payers,” she said.
The proposal she is sending to congress Tuesday is her long-awaited “Plan B” for answering court rulings requiring Argentina to first pay cash to a small fraction of “holdouts” who sued rather than join the more than 92 percent of bondholders who provided Argentina with billions of dollars in debt relief in 2005 and 2010. Those who joined in the debt swap have been paid ever since.
Friday’s court ruling seemed to leave Fernandez with no wiggle room: If she keeps refusing to pay the holdouts, Argentina’s payments to those who accepted previous swaps will be embargoed by the U.S. financial system, forcing the country into another default.
Argentina has filed a long-shot appeal to the U.S. Supreme Court, but meanwhile Fernandez is proposing that any bondholders who haven’t been paid, or who fear that their current payments will get held up, can trade their New York-law bonds for new bonds whose contracts will be enforced under Argentine law.
“We can’t keep the country under a ‘Sword of Damocles,’” she said. “The first decision we made is to ask God to shine down on the United States Supreme Court.”
“We’ve made two more decisions: Tomorrow we’re going to send a proposed law to Congress … to open for the third time the debt swap, for the 7 percent that haven’t entered. We want to face up to the promises of Argentina.”
She said bondholders who have worked with Argentina will be able to trade their current bonds for new ones under the same payment terms, but paid in Argentina rather than New York.
“Those who have Argentine bonds, we are going to replace these with similar bonds, in foreign currency, and under the same terms, but paid here in Argentina,” she said.
Analysts have predicted that any attempt to pay bondholders in Buenos Aires rather than comply with the U.S. courts will fail, reasoning that few bondholders who now can turn to courts in New York in any dispute with Argentina’s government will be willing to risk a change that makes Argentine courts the final arbiter.
3. ARGENTINA AIRLINE UNIONS WARN THEY WILL GO ON STRIKE IF LAN EVICTED FROM CAPITAL’S AIRPORT (The Washington Post)
August 26, 2013
BUENOS AIRES, Argentina — Argentine airline unions are threatening to strike Thursday if the government goes ahead with plans to evict the local subsidiary of Latin America’s biggest carrier from its Buenos Aires airport hangar.
Regulators have given LATAM’s LAN Argentina until month’s end to vacate its hangar at Aeroparque airport in downtown Buenos Aires. LATAM says Argentina’s government wants to undermine the company’s competitive advantage against money-losing state-owned Aerolineas Argentinas.
Unions say more than 1,000 LAN employees could lose their jobs if the eviction goes through. The Argentine APTA and Atcpea unions, whose members include airplane technicians, flight attendants and ground crews, warned on Monday that its members will strike on the eviction deadline.
“We’ve determined a nationwide stoppage for all airlines — Aerolineas Argentinas, LAN, Andes and Sol — that will affect international flights,” APTA union leader Ricardo Cirielli told reporters, listing the airlines that operate at Aeroparque.
Aerolineas Argentinas flies to most of the country’s cities and covers international routes including Madrid, Barcelona, Miami and New York. Sol has flights within Argentina and Uruguay, while Andes has cargo-only routes.
LAN now has 10 planes serving 14 Argentine cities. It says it will have to stop flying domestically in Argentina without the maintenance hangar. The company pays $20,000 a month in rent on the building under a contract that expires in 2013.
Aerolineas also has expanded its service, but continues to bleed money despite government subsidies that keep most of its ticket prices below what LAN charges. Many passengers prefer LAN because it has a better on-time record and has fewer delays due to strikes and other labor problems.
Flag-waving union members blocked the road leading to Aeroparque on Monday.
LAN Argentina, meanwhile, went to court to try to block the regulator’s decision.
“We want to keep flying in Argentina and that’s why we need our hangar in Aeroparque,” LAN said in a statement published by local newspapers.
The government says the eviction won’t affect the company’s services and LAN will be allowed to “continue its operations to and from the airport without risking operational security or jobs.”
The conflict with Argentina’s government is the latest setback for LATAM, which was formed when Chile’s LAN took over Brazil’s TAM airlines last year.
The company announced a quarterly loss of $330 million last week due largely to currency fluctuations in Brazil, and it was fined $1 million by Canada in a price-fixing case involving South American cargo shipments.
LATAM’s shares have lost more than half their value in the year since the merger.
4. ARGENTINA TO REOPEN DEBT SWAP AFTER ADVERSE U.S. COURT RULING (Bloomberg News)
By Eliana Raszewski and Camila Russo
August  26, 2013
Argentina will send a bill to Congress tomorrow to reopen a debt restructuring for those creditors who haven’t accepted previous swaps after the nation’s 2001 default, said President Cristina Fernandez de Kirchner.
The new swap, if approved by Congress, will offer holders of defaulted debt the same securities issued in previous restructurings in 2005 and 2010, Fernandez said in a nationally televised speech. She also said that holders of restructured bonds, who accepted discounts of as much as 70 percent, will be able to swap them into securities governed by Argentine law in a bid to prevent payment disruptions from a U.S. court ruling in favor of the holdouts.
The announcement came after a three-judge panel in a U.S. appeals court rejected Argentina’s attempt at reverting a ruling in favor of the defaulted debt holders, led by billionaire hedge fund manager Paul Singer’s Elliott Management Corp. and Aurelius Capital Management LP. Argentina argued that forcing it to pay holdouts at the expense of investors of restructured debt would violate its sovereignty and expose it to a fresh financial crisis by receiving billions of dollars in new claims. Fernandez rejected the court’s titling of the country as “a uniquely recalcitrant debtor.”
“Instead of recalcitrant debtors, we are serial payers,” Fernandez, 60, said in her speech, adding that the country has paid about $174 billion in debt since 2003. “The ruling ignored the country’s accords reached with 93 percent of holders of defaulted debt.”
With the effect of the ruling delayed until the U.S. Supreme Court decides whether to hear the case, a resolution may not come until the first quarter of 2014, according to law firm Shearman & Sterling LLP.
“We beg God to illuminate the U.S. Supreme Court,” Fernandez said.
The changing of jurisdiction on performing debt governed by international law will be voluntary and depending on the nation’s request for the Supreme Court to take their case, a government official, who isn’t authorized to speak publicly about the plans, said in an interview. The re-opening of the swap is intended to show the Supreme Court the nation’s willingness to pay, he said.
5. ARGENTINE IMPORTERS SAY PERMITS BEING DELAYED TO SHIELD RESERVES (Bloomberg News)
By Eliana Raszewski
August  26, 2013
Argentina is extending the time it takes to approve import permits in an effort to shore up central bank reserves that have dwindled to a six-year low, according to Argentina’s biggest importers’ association.
“Imports have become the variable of adjustment of this model of currency restrictions,” Miguel Ponce, an official at Cira, which represents companies that account for 80 percent of the country’s imports, said in a telephone interview from Buenos Aires. “The most affected by these delays are workers, small and medium-sized companies and industrial production, as the lack of parts and machinery is causing a decline in some industries.”
Argentina is blocking imports from Brazil, its biggest trading partner, Valor Economico reported today. President Cristina Fernandez de Kirchner started tightening import restrictions in 2011 to protect reserves after capital outflows jumped. She also banned most dollar purchases. Her efforts didn’t prevent central bank holdings from dropping to $37 billion on Aug. 23, the lowest since April 2007.
Industrial output expanded 2.8 percent in July from a year earlier, the slowest growth since April, according to the national statistics agency.
A weakening real, which has tumbled 14.1 percent against the dollar this year, is making Argentine exports to Brazil less competitive, according to Cristiano Rattazzi, president of Fiat Auto Argentina SA. Argentina’s peso has fallen 12.7 percent in the same period.
“A real at 2.4 per dollar is worrisome for Argentina” Rattazzi told reporters in Buenos Aires on Aug. 22. “A year ago, there were lots of investors here who were interested in auto part production. Today you won’t find as many.”
6. LAN ARGENTINA APPEALS EVICTION FROM AEROPARQUE HANGAR (Reuters News)
August 26, 2013
Aug 26 (Reuters) – Santiago-based LATAM Airlines, the biggest carrier in Latin America, went to court in Argentina on Monday to appeal its eviction from a hangar at a downtown Buenos Aires airport.
A spokesman for the airline said local unit LAN Argentina had filed the court challenge, but declined further comment on the case. The standoff has raised tensions with neighboring Chile, home of the airline’s major shareholders, which once included billionaire Chilean President Sebastian Pinera.
Two unions for Argentine airline employees pledged a strike on Thursday affecting flights throughout the country, as they blamed the government’s decision for risking some 1,500 jobs.
Argentina’s airport regulator said last Tuesday that LAN had 10 days to vacate the hangar at the Aeroparque Jorge Newbery because it was not a state airline. LAN is the main competitor of Argentina’s flagship carrier, Aerolineas Argentinas, which was nationalized in 2008.
LATAM, formed in a merger last year between Chile’s LAN and Brazil’s TAM, has said the decision puts the airline’s domestic Argentine operations at risk.
The government’s move has sparked a flurry of diplomatic activity between the South American neighbors and created another headache for LATAM, which is already struggling with fallout from Brazil’s weakening economy.
7. ARGENTINA OFFERS BOND SWAP TO SKIRT U.S. COURT RULINGS (Reuters News)
By Alejandro Lifschitz and Brad Haynes
27 August 2013
BUENOS AIRES, Aug 26 (Reuters) – Argentina’s government is proposing a voluntary bond swap on its foreign debt, shifting payments to Buenos Aires, if it cannot overturn U.S. court rulings that threaten to trigger its second debt crisis in just over a decade.
The bond swap would allow Argentina to keep paying the creditors who agreed to restructure the country’s sovereign debt after a record $100 billion default in 2002, President Cristina Fernandez said in a televised address on Monday night.
Investors in international markets would have the option to swap their foreign debt for Argentine bonds if ongoing appeals of the U.S. court rulings are rejected, a government source told Reuters on condition of anonymity.
Argentina on Friday lost its appeal of a U.S. court order requiring it to pay $1.33 billion to “holdout” hedge funds that refused steep discounts following the 2002 default.
If Argentina refuses to pay off the holdouts in full, the ruling could block payment overseas to the 93 percent of bondholders who accepted restructurings in 2005 and 2010 that give them less than 30 cents on the dollar.
In a direct plea to the U.S. Supreme Court, Fernandez urged justices to overturn the decision, which she warned could undermine future sovereign debt restructurings.
She also proposed a third restructuring of Argentina’s defaulted debt, offering holdouts another opportunity at the terms offered in the 2010 bond swap.
Her more conciliatory tone contrasted sharply with her past denunciations of the so-called “vulture funds” she accuses of trying to bankrupt the country. That defiant attitude had drawn the ire of judges in the United States, who fault Argentina for a lack of good faith negotiation with creditors.
Still, Fernandez insisted that her government was meeting its obligations and rejected one appeals court judge’s description of Argentina as a “uniquely recalcitrant debtor.”
“I would say that rather than ‘recalcitrant debtors’ we are serial payers,” she said. “Just as the country entered the Guinness (World Records) for the biggest sovereign debt default, we should also be in the Guinness among the countries that have most fulfilled our obligations over the past 10 years.”
In the 2005 and 2010 restructurings, Argentina issued international debt under New York, British and Japanese law.
But Fernandez’s proposal of a new bond swap raised questions about whether investors would be interested in taking Argentine bonds in lieu of foreign debt, given strict currency and capital controls that the left-leaning Fernandez government has imposed.
“Changing the location of the payments to Buenos Aires is going to be extremely complicated amid the currency controls,” said Jorge Todesca, a former deputy economy minister who is now head of the Finsoport economic consultancy.
“Argentina will never be able to issue public debt abroad if it continues trying to dodge a settlement,” he said. “We can assume Argentina will continue to be financially isolated from the rest of the world as long as this goes on.”
The president said she would send a bill to Argentina’s Congress on Tuesday in order to offer remaining holdouts the same terms as the restructured debts.
“I expect some holdouts to take this opportunity and tender their defaulted debt,” said Alberto Bernal, head of emerging markets at Bulltick Capital Markets in Miami. “The hardcore litigants will remain out of the swap.”
Bernal called the proposal to swap foreign debt for bonds paying in Buenos Aires a “pragmatic” move, adding that it would be easier than getting the necessary number of bondholders to agree on changing covenants of existing bonds.
8. SECOND CIRCUIT SIDES WITH FUNDS IN ARGENTINE DEBT CASE (Palm Beach Daily Business Review)
By Jan Wolfe
27 August 2013
In a victory for hedge funds holding debt of Argentina, the U.S. Court of Appeals for the Second Circuit refused to narrow injunctions intended to pressure the South American country to repay the funds. The ruling brings NML Capital Ltd. and other hedge funds closer to collecting about $1.3 billion.
The dispute stems from the Argentine government’s 2001 default on roughly $90 billion in sovereign debt. Argentina has repaid investors that were willing to take about 30 cents on the dollar, known as “exchange bondholders.” But the government has refused to pay a cent to investors like NML and EM Ltd. (sometimes called “vulture funds”), which acquired Argentine bonds on the cheap and are demanding to be repaid in full.
To pressure Argentina to pay, U.S. District Judge Thomas Griesa in Manhattan crafted a series of injunctions in 2011 that would block Argentina from prioritizing exchange bondholders over distressed debt investors like NML. The injunctions apply to a batch of pending lawsuits over $1.3 billion in bonds. The Second Circuit affirmed Griesa’s injunctions last October, ruling that Argentina’s repayment scheme violated a contractual promise to treat all bondholders equally. On remand, Griesa in November clarified that third-party financial institutions would likely be violating the injunction if they assisted Argentina in making continued payments to exchange bondholders. He also ruled that when Argentina pays the exchange bondholders, it must make a “ratable” payment to the hedge funds that includes principal and accrued interest.
In its ruling Friday, the Second Circuit affirmed that Griesa’s injunctions also apply to third-party banks. It also rejected Argentina’s argument that the “ratable” repayment formula is inequitable because it allows the plaintiffs to recover full principal and interest, whereas the exchange bondholders are currently receiving payments on just their accrued interest. Griesa did “no more than hold Argentina to its contractual obligation of equal treatment,” the court wrote.
The Second Circuit, however, stayed enforcement of the injunctions until the Supreme Court decides whether to review the case. Argentina’s lawyers filed a certiorari petition in June, arguing that the injunctions violate the Foreign Sovereign Immunities Act by restricting Argentina’s use of its property.
The hedge fund plaintiffs are represented by Debevoise & Plimpton and Gibson Dunn & Crutcher, among other firms. A Cleary Gottlieb Steen & Hamilton team including Jonathan Blackman and Carmine Boccuzzi Jr. represents Argentina. David Boies of Boies, Schiller & Flexner and the boutique O’Shea Partners represents a coalition of exchange bondholders including the hedge fund Gramercy Funds Management.
“Today’s opinion unfortunately glosses over the inequitable impact of the injunction on the Exchange Bondholders’ constitutionally protected property rights,” Sean O’Shea of O’Shea Partners said in statement.
9. ARGENTINA GOVERNMENT SEEKS TO REBUILD POWER AFTER ELECTION ROUT (Market News International)
By Charles Newbery
26 August 2013
Argentina’s government this week will seek to rebuild power after a worse-than-expected election result while a U.S. court ruling has put it at the risk of a second financial crisis in a decade.
President Cristina Fernandez de Kirchner last week sought to drum up support after her Front for Victory party suffered a defeat in the Aug. 11 national primary for the Oct. 27 midterm congressional election.
CFK last week made her first in a series of planned meetings with banking, business and union leaders, comparing the economy with Australia and Canada’s and leaving little room for criticism.
This drew widespread scorn in a country stagnating with 25% annual inflation, low investment and rising crime, prompting the president to send out a raft of tweets to pound home her beliefs and slam the press for conspiring against her.
She said the country’s finances are far from flimsy as the opposition insists, with the national debt just 18.8% of GDP compared with 27% in Australia and 86% in Canada, adding that the international reserves to foreign debt ratio is 26% compared with 3.6% in Australia and 5.2% in Canada.
Even so, talk has started on the end of the Front for Victory era that began with Nestor Kirchner, the president’s late husband. His administration helped pull the country out of a 2001-2002 economic crisis with 8% average growth between 2003 and 2011, thanks largely to a boom in international soybean prices, a main export.
The boom helped CFK win reelection in 2011 with 54% of the votes even though she failed to tackle inflation, which has surged despite heavy handed government policies to keep prices down.
Nor has she created adequate conditions for investment, which has led to a decline in the supply of goods, in particular energy. Rising imports of diesel, fuel oil and natural gas are reducing the trade surplus and costing the state billions of dollars.
Buenos Aires Gov. Daniel Scioli, a long-time ally of the president yet with an equally tenuous relationship, said Argentina needs to create a climate “without uncertainty” to rebuild the economy.
Another big battle will be with creditors that declined to accept an about 70% haircut to swap their bonds in two debt restructurings of the nearly $100 billion in defaulted bonds from 2001.
A group of these so-called holdouts are suing for $1.33 billion, and last week a U.S. appeals court rejected the government’s proposal to pay them the same rate paid in the restructurings.
The court, however, said the $1.33 billion payment would be on hold pending a decision by the U.S. Supreme Court to review the case. This has kept Argentina out of a technical default.
The government will report July supermarket and shopping mall sales Tuesday followed Friday at the same time by construction activity and consumption of public services for the same period.
10. ELECTORAL PRESSURES RAISE TAX RISKS IN ARGENTINA AS GOVERNMENT CONSIDERS US COURT RULING (IHS Global Insight Daily Analysis)
By Laurence Allan
26 August 2013
The Argentine government is assessing how to resource potential tax boost for lower income sectors.
IHS Global Insight perspective
Significance
The Argentine government is considering tax rises on some sectors to allow it to lift the income tax floor for its core support base.
Implications
Concerns about the country’s potential financial position were sharpened by a ruling by a US court on the debt ‘holdouts’ on 23 August, but the government is still seeking populist measures before the 27 October mid-term elections.
Outlook
Although the mining sector looks an obvious government target for tax increases, that risk is partly mitigated in the short term by the political costs of a conflict with the mining industry in the run-up to the October elections.
Argentine president Cristina Fernández de Kirchner after the government’s disappointing performance in the 11 August primaries.PA.17294719
The Argentine government of President Cristina Fernández de Kirchner is considering raising taxes on the country’s mining and other sectors in an effort to generate revenue that will allow it to raise the earnings point at which employees start to pay income tax. The government move to lift the level at which income tax is payable fits clearly within its self-described ‘national and popular’ style, and would be the second such income tax reform in 2013. In electoral terms, it is clearly aimed at buttressing Fernández’s support base in lower-income sectors after a disappointing government performance in the 11 August primaries.
Fernández met business sector leaders on 21 August and informed them that the government intends to raise the ‘Ganancias’ tax (the level at which people start to pay tax), according to reports in the country’s media. It is unclear exactly how many Argentine workers that move might potentially benefit. However, given ongoing concerns about the government’s fiscal position, it is clear that any such move will need to be funded by the generation of fresh revenue elsewhere. One area that the government is considering in that respect is Argentine tourism overseas – Argentines travelling outside the country are already subject to a 20% government tax on credit card spending overseas. Argentina’s Central Bank assessed that Argentine tourists spent USD5.4billion abroad in the first six months of 2013, so they would seem a likely target for further attention from the government. With the government likely to view the majority of Argentines travelling and spending overseas as middle-class – and therefore not forming part of its potential support base – it is likely to view such a move as relatively low-cost in political terms.
The government is also reported to be considering raising withholding taxes on mining exports to fund the move on income tax, according to Argentine financial daily Ambito Financiero, although the government remains cautious about such a move in view of falling global prices for minerals. The impact of tax rises on mining exporters would almost certainly prove conflictive and could also drive disagreement between the national authorities and local authorities in Argentina’s mining provinces. These regions depend heavily on mining for local economic dynamism and as a major revenue stream that pays for public services and salaries, mainly in western Argentina. However, that does not totally outweigh the importance to the Fernández government of the revenue that a move on mining taxes could potentially generate, but does partially mitigate the risk of that decision taking place before the 27 October elections.
Outlook and implications
These moves take place against the background of what could prove to be a rather more significant challenge for the government and the Argentine economy more broadly. On 23 August, a New York City court ruled against Argentina in the long-running legal battle between it and so-called ‘holdouts’ – holders of USD1.3 billion of Argentine debt related to the 2002 default who elected not to enter two debt swaps in 2005 and 2010 (see Argentina: 28 March 2013: ). The court ruling in principle means that Argentina must pay those holdouts the full value of their bonds, with at least the first payment of the outstanding interest – USD67million – due to begin on 30 September, with two further payments due on 2 and 31 December. A stay on payment of the debt itself could be effective until November, when the US Supreme Court will decide whether or not it will accept jurisdiction over the case. That buys the Argentine government some political breathing space, allowing it to keep telling the Argentine electorate that its battle with the holdouts – or ‘vulture funds’, as Fernández describes them – is ethical, without seeing major consequences potentially challenging that position until after the 27 October mid-terms. However, if potential government action on raising taxes looks likely to generate revenue for moves designed to boost its electoral support, the risk of such policy being rolled out more aggressively looks higher after the elections, when without electoral concerns in the immediate foreground, Fernández could look to the mining sector to take on an increased tax burden.
11. ARGENTINE AIRPORT WORKERS THREATEN STRIKE OVER LAN EVICTION (Dow Jones Global News Select)
By Shane Romig and Graciela Ibanez
26 August 2013
BUENOS AIRES -(Dow Jones)- Latam Airlines Group SA (LFL, LAN.SN) received wide support from Argentina’s airport personnel and cabin crews who have called for a nationwide strike Thursday to protest the government evicting the company’s LAN Argentina unit from a hangar at the central Buenos Aires airport.
Last week, the local airports regulator Orsna ordered Chile’s LAN to leave the hangar by August 29, despite the carrier having a lease until 2023. Those airport facilities are designated only for use by the government, and LAN, being a private company, can’t use them, the regulator said.
Critics say the move is aimed at crippling LAN’s operations in Argentina and giving an advantage to state-owned Aerolineas Argentinas and Austral.
LAN filed a lawsuit in Argentine court Monday and is seeking an injunction blocking the order for it to vacate the hangar, a company spokesman said.
Without the hangar at Aeroparque Jorge Newbery airport, LAN says it can’t provide maintenance to the smaller airplanes that fly within Argentina, making the domestic operation unviable. The company plans to continue using Aeroparque for international flights.
Travelers seek out flights to and from Aeroparque due to its easy access from Buenos Aires. The other option is the main international airport, Ezeiza, located about 30 kilometers from the city center.
Aircraft technicians, ground crews, air traffic controllers and cabin crews from LAN Argentina, Aerolineas Argentinas, Austral, Andes and Sol airlines will go on strike the moment that LAN is evicted, the Aircraft technicians association APTA and the flight attendant association ATCPEA said in a joint statement.
The strike is to protest the “unjust, unnecessary and abusive threats” made against LAN by the federal aviation authorities, the associations said.
Argentine officials stood by the contract recision. LAN “tried to take a technical issue and make it political,” Orsna’s president Gustavo Lipovich said in a statement.
“The decision isn’t based on getting LAN out of Aeroparque… rather it’s a technical question given the large growth of the airport,” he said.
There isn’t any plan to “kick out LAN or any other airline,” Aerolineas Argentinas said in a statement.
However, analysts noted that there are strong nationalist sentiments in play.
“It’s inevitably political,” said Patricio Navia, political analyst and professor at New York University. “Because of the implications of having the most visible Chilean company in Argentina persecuted by the Argentine authorities in favor of Aerolineas Argentinas, a state company that is closely tied to [Argentine president Cristina] Kirchner’s allies.”
The Argentine move, “doesn’t meet the minimal standards for international law related to the treatment of foreigners,” said Hernan Felipe Errazuriz, Chile’s former foreign affairs minister and partner at Guerrero Olivos Novoa Errazuriz law firm.
A spokesman for Aerolineas Argentinas did not return messages seeking comment.
The conflict reached both country’s foreign affairs ministers, who discussed LAN’s situation in Santiago Friday. After the meeting, Argentinean minister Hector Timerman said he can’t solve a company’s problems. A few Argentine governors from provinces bordering Chile worried that tourism would decrease if LAN stopped its local operations.
Most likely, LAN plans to escalate the conflict and threaten to fold up operations in Argentina in a bid to build up support among middle-class Argentines, Mr. Navia said.
In May, LAN suspended its Argentine flights one day because Argentina’s state-run ground services company, Intercargo, stopped offering ramp services, refused to load equipment and declined to transfer passengers on buses to and from LAN’s airplanes in a dispute over fees. The conflict ended after LAN agreed to pay Intercargo nearly $4 million as part of a new, more expensive contract.
The carrier, Latin America’s biggest, has repeatedly said it will continue operating in Argentina, which accounted for around 9% of 2012 revenue, as long as the government allows it. Currently LAN flies to 14 destinations in Argentina and employs about 3,000 workers.
The clash over the hangar in Buenos Aires comes at a difficult time for Latam Airlines, which reported a $330 million net loss in the second quarter, mostly due to a depreciation of the Brazilian real against the dollar.
Latam Airlines was formed in June 2012 from the merger between Chilean LAN Airlines and Brazilian carrier TAM.
12. URUGUAY SEEKS TO SELL SUPPLIES FROM LNG PROJECT TO ARGENTINA (Platts Commodity News)
By Charles Newbery
26 August 2013
Buenos Aires (Platts)–26Aug2013/704 pm EDT/2304 GMT   Uruguay plans to eventually sell natural gas supplies to neighboring Argentina once it has a floating terminal in place to receive liquefied natural gas supplies, an official said Monday.
A first draft of the supply agreement could come as soon as Tuesday, when presidents of both countries are scheduled to meet in Montevideo to inaugurate projects at the 50,000 barrel a day La Teja oil refinery there, Raul Sendic, president of Uruguay’s state-owned energy company ANCAP, said in a statement. The deal would be between ANCAP and Argentina’s state-run YPF, he added.
“We have prepared a draft [agreement] between ANCAP and YPF to create a task group to study the future supply of gas from Uruguay to Argentina,” Sendic said.
In May, ANCAP awarded to France’s GDF Suez a contract to build the country’s first LNG regasification terminal. It will have a send-out capacity of 10-15 million cubic meters a day and will start receiving cargoes as soon as March 2015, according to ANCAP.
Uruguay is betting on the project to help diversify energy supply and suppliers so it can reduce its reliance on hydropower and imported oil. While it only consumes about 300,000 cu m/d of gas piped in from Argentina, authorities say power plants alone could boost the country’s consumption to 5 million cu m/d.
Uruguay had planned to expand gas distribution in the early 2000s, but a cutback in expected deliveries of up to 8 million cu m/d from Argentina made that impossible. Argentina reduced its gas exports to contend with shortages at home as its own gas output declined, forcing it to ramp up gas imports. Gas meets 50% of energy needs in Argentina.
In response, Uruguay opted to build the regasification terminal to guarantee steady deliveries instead of relying on a single supplier. Argentina was on board the LNG project at first but pulled out without saying why, prompting ANCAP to go it alone.
Even so, Sendic said in May that ANCAP would be able to export excess supplies from the LNG terminal, most likely to Argentina over a bidirectional pipeline running between the countries.
13. ARGENTINE WHEAT SAFE FOR NOW FROM LATE WINTER FROST (Kingston Whig Standard)
By Hugh Bronstein
27 August 2013
BUENOS AIRES — A late-winter cold snap in Argentina raised concern about the country’s recently sown wheat crop at a time of high world demand and soaring local prices, but local experts said on Monday that the low temperatures have done little or no damage.
The weather worries supported Chicago futures and came just as Argentina’s northern neighbor and main wheat buyer, Brazil, said it will have a smaller-than- expected crop this year due to July frosts. World demand for wheat is solid this year due in part to steady demand from China.
Most local meteorologists and analysts said the Antarctic air that blasted Argentina over the weekend and early on Monday will not affect 2013/14 yields because it hit too early in the season for Argentine wheat plants to be vulnerable.
“The leaves on some of the more susceptible varieties (of wheat) may have suffered from the cold, but the plants themselves can recuperate,” said Tomas Parenti, weather expert at the Rosario grains exchange
“The frosts could have done irreversible damage had the plants been in a more advanced and vulnerable growing stage when the temperature dropped,” he added.
Chicago Board of Trade wheat futures rose more than 3 percent on Monday, the biggest one-day advance since April, on spillover strength from corn and soybeans, short-covering and worries about frost-bitten South American farms.
The South American grains powerhouse is expected to produce 12 million tonnes of wheat during the crop year, half of which is for export, according to the U.S. Department of Agriculture (USDA). Argentina is a ma-j or world supplier of wheat, corn, soybeans, soyoil and soymeal animal feed.
The Commodity Weather Group, a private U.S. forecaster, reported that temperatures fell to the upper teens to lower 20s Fahrenheit (minus 9 to minus 4 degrees Celsius) in 20 percent of the Argentine wheat belt, cold enough to damage crops in the early jointing stage.
But local growers and farm sector analysts said it was too soon after planting for any real damage to have been done.
“Frost can hurt wheat in Argentina when the plants are in their sprig-forming stage, starting around Sept. 15,” said Pablo Adreani of the local Agripac consultancy. “Today’s frosts cannot hurt potential yields very much because the plants are still in their vegetative stage.”
“Until mid-September, frost is not a problem for Argentine wheat,” said Gabriel Perez, analyst at the Mercampo consultancy.
The crop has just begun to cover parts of the Pampas grains belt with a carpet of green sprouts set to grow through the spring and be harvested in December and January, at the height of the Southern Hemisphere summer.
Between now and then, Argentina faces a wheat shortage that has prompted the government to adopt price controls to try to keep bread on consumers’ tables ahead of October’s midterm congressional election.
Export limits meant to ensure ample domestic food supplies backfired this year as the government approved too much wheat for export based on optimistic early season crop estimates.
Interest in the upcoming crop is intense, as very little wheat remains in Argentina to be milled into flour for bread.
Voters, concerned about double digit inflation and other effects of President Cristina Fernandez’s unorthodox economic policies, gave her a drubbing in this month’s mid-term primary. Candidates sponsored by the 60- year-old two-term president got only 26 percent of the vote nationwide.
14. EMBARKING ON A FOREIGN JOURNEY (Farm Industry News)
By Kathy Huting
26 August 2013
This week I leave for what will very likely be a once-in-a-lifetime experience. I’m saying “adios” to the U.S. as I embark on a journey to Uruguay and Argentina, where I’ll be bringing some unique coverage to you about the agriculture industries in each of those countries. The event is the 2013 International Federation of Agricultural Journalists Congress in Argentina, but first up is the pre-tour stop in Montevideo, Uruguay.
70% of Uruguay’s exports are agricultural. Beef is the primary agricultural export, and farmers in Uruguay also produce wool, vegetables, dairy, poultry and hogs. So there should be plenty to learn about the production of each of these commodities, but there will also be some unique opportunities. For instance, one stop we’ll make is at Ruta del Olivo, which is a company focused on olive-growing enterprises in the country.
After a couple of days in Uruguay, we’ll travel to Buenos Aires, Argentina, where the main program will start. Agricultural journalists from around the world will convene in Buenos Aires, where we will learn all about the country’s thriving agriculture industry.
Half of Argentina’s industrial exports are agricultural in nature. The major agricultural exports include soybeans, corn and wheat. We will visit farms where some of these items are produced, and we’ll learn about Argentinian agriculture as we travel from Buenos Aires, to a few hours away in San Pedro, and finally Rosario city. I’ll spend a day taking a grain tour and I hope to bring to you comparisons on what Argentinian grain production looks like compared to our practices in the U.S.
Farm Industry News has brought you international farm show coverage before, but I hope to bring you a different view of what agriculture is like internationally through my experiences in Uruguay and Argentina. I hope to do that through the conversations I’ll have with farmers, political leaders, local media and more. And here’s hoping that second major in Spanish from Iowa State pays off, too.
Stay tuned to hear more about my foreign adventures.
One organization that made it possible for me to attend the Congress was the American Ag Editors Association through their Professional Improvement Fund. Thanks to AAEA for providing this opportunity to bring you some very unique coverage and help spread the message about agriculture’s importance.
15. RENOWNED ARCHITECT IS NOW ON BOARD; CESAR PELLI JOINS TEAM REDESIGNING AIRPORT (The Times-Picayune)
Doug MacCash
27 August 2013
Cesar Pelli, an international architecture star, has joined the team redesigning the Louis Armstrong New Orleans International Airport, according to an announcement by airport officials.
If all goes as imagined, the $826 million project will result in a new 30-gate terminal, complete with hotel, parking garage, highway access and other amenities. The airport rebuild is supposed to be finished by New Orleans’ 300th anniversary on May 5, 2018.
Pelli is an ideal choice to bring big-name caché and airport design expertise to the ambitious endeavor. Pelli, 86, was born in Argentina and immigrated to the United States when he was in his 20s. His innumerable career highlights include a stint as dean of the Yale University School of Architecture and his design of the gorgeous Petronas Towers in Kuala Lumpur, Malaysia — the world’s tallest building from 1998 to 2004.
In 1956, Pelli assisted modern master Eero Saarinen on the design of the iconic gull-winger TWA terminal at what is now John F. Kennedy International airport in New York. Forty years later, Pelli designed the Ronald Reagan International Airport terminal in Washington D.C. The D.C. airport is one of the nations’ loveliest, with its charming iron-ribbed ceiling, round skylights and elegant floor mosaics.
In a 1997 interview with the Washington Post, Pelli defined some of his airport design criteria: “I like airport terminals that have lots of natural light, that are spacious, that make you feel comfortable, where being there is a pleasant thing. It is also important that directions be easy to follow. Unfortunately, most airports have been designed primarily for the convenience of the airlines. People are just an inconvenience.
“The (airport) public spaces should be such that they don’t contribute to the stress. They should make the experience of being in the airport as pleasant and as uplifting as one can make it. I love that word, ‘uplifting,’ for an airport.”
Pelli recently made his mark on New Orleans with the soaring silvery interior of Xavier University’s new St. Katharine Drexel Chapel that opened in October 2012.
Pelli joins New Orleans’ William Raymond Manning of Manning Architects and Lionelle Hewitt of Hewitt Washington Architects in the Armstrong airport redesign.
It was earlier reported that the old sections of the current terminal will be demolished. The current terminal, capped by an arched atrium, was designed in 1959 by the firm Goldstein, Parham and Labouisse with Herbert A. Benson and George J. Riehl.
The airport opened in 1940. Ironically, it was named for aviation pioneer John Moisant, who crashed and died at the site in 1910 after flying from City Park. In 2001, the airport was renamed for jazz legend Louis Armstrong, though the airport code MSY still recalls the earliest name of the field: Moisant Stock Yards.
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WEDNESDAY

1. ARGENTINA BONDS FALL ON DEBT-SWAP OFFER (The Wall Street Journal)
By Shane Romig
August 27, 2013
*Maneuver Follows U.S. Legal Setback.
BUENOS AIRES–A maneuver by Argentina’s government to try to pay creditors by circumventing U.S. court orders sent most of the country’s debt securities prices plunging on Tuesday.
In the latest move in a decade-old legal saga over the country’s momentous 2001 default on about $100 billion of debts, President Cristina Kirchner on Monday said the government will offer to pay its investors in Buenos Aires rather than in New York. It also plans to reopen for a second time the debt swap, allowing investors holding old defaulted bonds to trade in for new bonds, at a hefty discount.
The move was in response to U.S. Second Circuit Appeals Court ruling last week affirming a judgment blocking Argentine payments in New York on new bonds issued as part of the dept swap unless it also settles the $1.33 billion plus interest it owes to holdout creditors. The block is on hold pending an appeal to the U.S. Supreme Court.
Owners of the new bonds have a tough choice to make: either agree to receive their money in Buenos Aires instead of in New York, or face the possibility that Argentina might not be able to keep making payments on the New York bonds.
Argentina’s currency controls, limits on getting dividends out of the country and shifting policies also add a significant level of risk compared to New York bond law. There’s also a risk that U.S. courts seek to block Argentina’s attempts to move payments to Buenos Aires, potentially making creditors who make the switch liable for contempt of court. District Judge Thomas Griesa has issued an order prohibiting anyone from participating in Argentine maneuvers to skirt his rulings.
“The last thing we would consider would be swapping New York law bonds for Argentina local law bonds,” said Jim Craige, portfolio manager at Stone Harbor Investment Partners LP which holds a “negligible” amount of Argentina’s defaulted debt but none of the swap bonds. “I’m not sure if they’re going to pay us in soybeans or pesos but it’s probably not going to be dollars.”
Analysts said the proposed swap may give holdouts all they need to go to the appeals court and ask it to lift its stay. Then it becomes a question of whether anyone in New York is willing to help Argentina carry out the swap and risk being accused of violating the court order.
“If the stay is lifted I don’t see who is going to carry the water for them in New York and at what price,” said Anna Gelpern, professor of law at Georgetown University and a fellow at the Peterson Institute for International Economics.
With default more likely, the cost to insure Argentina’s sovereign debt against default rose to $2.804 million per year for five years to protect $10 million of debt, from $2.475 million per year late Monday, according to data provider Markit.
In the 2005 and 2010 swap offers, about 93% of the old bonds were tendered, with investors accepting losses of about two-thirds of face value.
The outstanding 7% are held by the holdout creditors led by Aurelius Capital Management and Elliott Management Corp.’s NML Capital Ltd., who are expected to continue pursuing demands in U.S. courts.
A spokesman for NML declined to comment on Tuesday. Aurelius could not be reached for comment.
Despite the worries, some investors took heart at the payment assurance.
“I’d rather get paid in dollars in Argentina rather than get paid nothing in New York,” said Ray Zucaro, portfolio manager and managing principal at SW Asset Management LLC. Mr. Zucaro’s firm has $375 million under management and holds some Argentine securities known as GDP warrants. He said his company would likely participate in the proposed swap.
“The government is reopening the swap not to escape from U.S. legislation but to protect the investors who participated in the previous swaps in 2005 and 2010,” said Aldo Pignanelli, a former president of the Central Bank of Argentina. “This clearly shows the government wants to continue paying them.”
Argentina will likely be able to sway more holders of defaulted bonds to accept the new swap, perhaps taking the acceptance rate over 95%, Alberto Bernal-León, head of research at Bulltick Capital Markets, said in a note. The move “shows pragmatism from the government,” Mr. Bernal-León said. “We continue to contend that Argentine bonds will outperform its emerging market peers this year by a very wide margin.”
Other holders of Argentina’s restructured bonds are waiting to see the details of the swap implementation before deciding if the move is positive or negative for overseas bondholders.
“It could go one way or the other,” said Emilio Ilac, managing director of institutional clients at investment bank Puente. Puente submitted a brief to the U.S. appeals court arguing that payment shouldn’t be blocked to bondholders who accepted the restructuring.
2. ARGENTINA TO DEFY U.S. COURT WITH BOND PLAN; PRESIDENT FERNANDEZ PROPOSES A SWAP WITH NEW DEBT ISSUED OUT OF HER COUNTRY (Los Angeles Times)
By Ken Bensinger
28 August 2013
Just days after a U.S. appeals court ruled that Argentina must pay a small group of bond investors more than $1.3 billion, the country’s president laid out a debt-swapping plan designed to get around the decision entirely.
The move was the latest bizarre twist in the long-fought dispute over the nation’s unpaid debts, a battle that has involved a seized warship and a profusion of public vitriol while capturing the attention of the international finance community.
The defiant new proposal, disclosed late Monday on national television by President Cristina Fernandez de Kirchner, may mark a turning point in the matter because it could accelerate the slow-moving legal process in the U.S. and push the South American nation into technical default.
In a wide-ranging address, Fernandez said she would ask the country’s legislature to pass a law offering holders of the nation’s bonds the chance to swap them for new bonds issued out of Argentina instead of New York.
The idea, she said, was “to avoid any barriers to payment because we have suffered such barriers before.”
The proposal flies in the face of an unfavorable ruling Friday by the U.S. 2nd Circuit Court of Appeals in New York.
That case stems from Argentina’s 2001 default on nearly $100 billion in sovereign debt. The nation settled with investors holding about 93% of the bonds by swapping the securities out for discounted ones issued in 2005 and 2010.
But holders of the remaining 7% refused the deals, and some, led by hedge funds Elliott Management and Aurelius Capital Management, sued in federal court in New York.
Last year, a district judge found that Argentina had violated its debt contracts and must pay the holdouts face value plus interest or it couldn’t pay anyone, including those who agreed to the swap.
Friday’s ruling, by a three-judge panel, upheld that decision and barred Argentina’s bank in New York from processing any payments to bondholders without also including the holdouts.
Fernandez has vowed publicly never to pay the holdout investors more than those who settled.
Under the proposal she outlined in her televised address, Argentina would offer all bondholders a chance to swap their securities issued in the U.S. for new bonds issued in Argentina under the same terms as those in the renegotiated bonds.
Her plan could engender more trouble with U.S. courts, as the circuit court judges explicitly warned Argentina against attempting to find another forum to pay its creditors as a way to dodge the ruling.
The 2nd Circuit also issued a temporary stay on its ruling, pending a U.S. Supreme Court review of a prior decision in the case. But Argentina’s announcement could prompt the appeals court to lift the stay.
In that event, Argentina could be faced with a difficult choice: pay all the bondholders or default on the exchange bonds as well. For bondholders, the new proposal by Fernandez presents a dilemma.
Although investors generally prefer the legal protections offered by U.S.-issued bonds, Argentina’s pledge never to pay the holdouts, and the recent court ruling, may give them a dire choice: roll the dice in Argentina or get nothing in New York.
Fernandez, who expressed hope that the case would still be resolved in the U.S. legal system, prayed that “God shine down on the United States Supreme Court.”
She also portrayed the situation as a matter of fairness. She said that those holdouts who sued Argentina represented just 0.45% of the original bonds and that they shouldn’t determine the fate of the vast majority of investors who accepted the exchange.
Elliott has not disclosed its holdings or the price it paid to acquire them in the secondary market. The hedge fund specializes in buying distressed debt at a discount and then suing for full value.
Last fall, for instance, it and other holdouts successfully petitioned a court in Ghana to seize an Argentine military ship, but the boat was eventually released.
Fernandez’s speech, which lasted about half an hour and included a history of the country’s borrowing habits that blamed prior administrations for Argentina’s financial woes, was followed by a barrage of more than 40 blasts from the president’s Twitter account, @CFKArgentina.
“This past Friday we have proven definitively that history is always just around the corner, particularly when it comes to economics,” one tweet reads.
3. URUGUAY INAUGURATES DESULFURIZATION PLANT FOR ITS REFINERY IN JOINT VENTURE WITH ARGENTINA (The Washington Post)
August 27, 2013
MONTEVIDEO, Uruguay — Uruguay has inaugurated a desulfurization plant for the county’s sole oil refinery.
The refinery expansion in Montevideo is a joint venture of Argentina’s state-owned YPF and Uruguay’s ANCAP oil companies.
The plant will reduce by 99.5 percent the amount of sulfur in diesel fuel and some 85 percent in gasoline to improve ANCAP’s environmental standards and efficiency. The sulfur will be collected and sold to a Uruguayan company to be used for fertilizers.
Argentine President Cristina Fernandez said during the plant’s unveiling Tuesday that the $400 million investment marks a milestone in relations between the neighboring nations.
Uruguayan President Jose Mujica said the expansion helps ANCAP to remain in the industry as the sulfur was badly damaging the refinery’s equipment. Uruguay’s presidency puts the investment at about $350 million.
4. ARGENTINE ROULETTE (Financial Times)
By Joseph Cotterill
August 27, 2013
They did it! They finally did it, post-Second Circuit fiasco:
Argentina will send a bill to Congress tomorrow [August 27] to reopen a debt restructuring for those creditors who haven’t accepted previous swaps after the nation’s 2001 default, said President Cristina Fernandez de Kirchner…
She also said that holders of restructured bonds, who accepted discounts of as much as 70 percent, will be able to swap them into securities governed by Argentine law in a bid to prevent payment disruptions from a U.S. court ruling in favor of the holdouts.
We first looked at the why and how of using a local-law swap to get round the pari passu problem which Argentina has made for itself — back in November. That’s how interminable this pari passu saga has been.
Much more in CFK’s speech. Come for the baldly disingenuous assertion that calling Argentina a “uniquely recalcitrant” debtor is “un poco injusto”; stay for confirmation that the new bonds would be paid through Caja de Valores, the local clearing house. Surely it’s not about showing credibility to the Supreme Court by reopening the swap to holdouts: the actual plaintiffs won’t take the offer, and the judges haven’t considered Argentina’s petition directly yet.
FT Alphaville’s considered take on all this? It’s pretty nuts.
We’re not alone in this of course, and in truth there’s not much to add. Is it actually crazy? Well, why announce the swap now? That’s our question. It covers three areas, and it’s at least interesting to consider how complex the saga is getting…
1.) It doesn’t imply much confidence on Argentina’s part that the current stay of the rulings can hold throughout the remaining appeals and Supreme Court process.
http://ftalphaville.ft.com/files/2013/08/Barc_Arg1.png
Via Barclays — those are the next payments on the (foreign-law) restructured debt. The late 2013 ones would be covered by the stay certainly so long as the Supreme Court considers the petition (and likely gives the US government months to provide its view). This is still a courtesy from the Second Circuit to the higher court, but it’s generous to Argentina in the circumstances. But it’s still roulette: you need the stay to be in place for each of those payments (and the next payments after those), even if there are months and months between each event in the Supreme Court litigation.
It’s worth bearing in mind that the current stay dates back to November last year. Its terms said that Judge Griesa’s “November 21, 2012 orders… are all stayed” with respect to enforcing the injunction. As of the August ruling, “the amended injunctions shall be stayed” pending Supreme Court review of a “timely” cert petition by Argentina. “Timely” might not even mean the cert petition which has already been filed, implying a longish period of time. More on this below.
It’s possible, as Mark Weidemaier notes, that “all stayed” covers Griesa’s order for Argentina not to try “altering or amending the processes or specific transfer mechanisms by which it makes payments on the Exchange Bonds”. (Where a local-law swap surely fits the bill.) We’d assumed before that this bit wasn’t stayed, but we’d be the last to underrate the importance of loopholes in this case.
In any event there’s one cynical way to look at this. If Argentina could quite legally offer a swap during the stay, why not do it sooner — now — rather than later?
Well, a better question: would it really be a good idea to tempt fate here?
It’s an invitation to the holdouts to demand the stay is lifted given Argentina’s continued defiance. They’d surely do this anyway the next time an Argentine government official said something about not giving the vultures a red cent, but this is an enticing loophole.
More to the point, the Second Circuit has just made clear it doesn’t like ways of dealing with holdouts that “ignored the outstanding bonds and proposed an entirely new set of substitute bonds”. The gist of CFK’s plan also seems to involve suspending the lock law which US courts have seen as such an overt tool of subordination. Not abolishing it.
Giving an ear to the holdouts, the courts might say the stay didn’t mean to allow a swap in the first place, or they might have the terms amended anyway. In any case, Argentina’s own hedging against removal of the stay might risk lifting the stay. Not so much roulette as self-fulfilling prophecy.
2.) Nor does it imply Argentina had much confidence that Supreme Court litigation can transform this case, or buy enough time to come up with the next cunning plan.
That’s actually… fairly rational of Argentina, if it did think that. Fairly. The substance of its first petition to the Supreme Court wasn’t spectacular: Argentina didn’t have the final ruling on actual payments to complain about yet, so it was limited to alleging abuses of sovereign immunity and equitable relief by federal courts. (It hammed it up by claiming this was all “unprecedented” — it could well be — but that might be a red flag to the Supreme Court for taking up the case.)
This still doesn’t explain why Argentina is launching the swap now. That’s because the Supreme Court’s basic value to it is surely still the time on the clock it brings. Barclays analysts on Friday argued that SCOTUS end-dates for Argentina might lie as far out as June 2014 (if judges took the case on to next term’s docket and it went to argument, after granting cert) or June 2015 (if this term’s docket was full before granting cert). Any 2015 date is interesting because it heads into the point where restructured holders couldn’t sue Argentina for offering better terms than they got to holdouts, in any future deal.
This assumes the granting of cert. But then the Second Circuit’s ruling on Friday seemed to allow for a second petition by Argentina — maybe for it to complain about the payments aspects or treatment of third parties.
So with all that time on offer, it still seems weird to aggressively seek insurance on a defeat at the Supreme Court (particularly as the reported swap terms seem to imply some kind of trigger on a defeat there). What else then?
3.) The August 23 ruling might have made clear that the institutions necessary for payment of the restructured debt (which is a list starting with Bank of New York) can’t be relied on the next time Argentina tries to make a payment.
This is one of the more interesting ways to look at the swap. On the whole, Friday’s Second Circuit decision came down like a ton of bricks on third parties trying to get themselves carved out of the injunction itself.
The intriguing thing is what would happen to BNY, the trustee for the bonds, or a clearing house, should they still be in the frame when a restructured payment comes down the tubes without any accompanying payment to holdouts.
It’s nothing good — the court suggested that financial third parties “are already called on to navigate US laws forbidding participation in various international transactions”: putting the wrong kind of payment on restructured sovereign debt in the same box as money-laundering controls. But it still read unclear to us if it would be automatic contempt to assist Argentina. All the Second Circuit said was that BNY etc “will be entitled to notice and the right to be heard” if someone sued over this stuff.
But that’s kind of belied by Judge Barrington Parker more or less using a great big foam-finger to point to “exculpatory clauses” in BNY’s trustee document that the bank could use to avoid a suit. (Footnote 11 of the judgment). Which is why it’s hard to see the bank not using these clauses to get out now, or in advance of a contentious restructured payment.
In which case Argentina’s race to get Caja de Valores on board makes more sense. But then the moves to create a new payment structure might anger the US courts enough to scare away the existing structure. Not easy to arrange a bond swap on your own.
And so to see if the stay holds…
5. ARGENTINA PLANS NEW YORK-BUENOS AIRES BOND SWAP (Bloomberg News)
By Camila Russo
August  27, 2013
Argentina is offering to swap holders of New York-law bonds into debt governed by local legislation as investors shift into the notes after a U.S. court sided with creditors seeking full repayment on claims from the nation’s record default in 2001.
The move comes after the Aug. 23 ruling, which prompted dollar-denominated local law bonds due 2017 to rally and yield 3.95 percentage points less than similar-maturity notes issued under New York rules yesterday. The gap grew to within 0.11 percentage point of the record 4.06 percentage point difference April 3. At 11.85 percent, the local-law debt yielded twice the emerging-market average, according to JPMorgan Chase & Co.
Faced with the prospect of paying the holdout creditors in full or risking a second default in 12 years, President Cristina Fernandez de Kirchner said in a national address yesterday she will offer a third swap at the same terms to owners of defaulted debt who rejected previous exchanges, as well as to holders of the restructured notes. The proposal is aimed at circumventing the U.S. court ruling without reneging on payments to the New York-law bondholders.
“There was always the expectation that if Argentina couldn’t win in court, it would find anther way to get its way, for example, by re-routing payments,” Diego Ferro, co-chief investment officer at Greylock Capital Management, which oversees $500 million in emerging-market debt including restructured Argentine bonds, said in a telephone interview. “It’s a predictable patch solution that in the end guarantees that dollar debt will be paid.”
Bonds Fall
Greylock hasn’t decided whether it’ll accept the debt swap into local law, Ferro said.
Argentina’s proposal trigged declines in the local-law bonds today. The dollar securities due 2017 fell the most in four months, plunging 2.88 cents to 85.26 cents on the dollar at 2:09 p.m. in New York. Dollar notes due 2017 sold under New York law tumbled 1.73 cents to 78.43 cents on the dollar.
The appeals court on Aug. 23 said it would delay the effect of its ruling until the U.S. Supreme Court decides whether to review the case, which may not come until the first quarter of 2014, according to law firm Shearman & Sterling LLP. The stay would be lifted if the Supreme Court doesn’t take the case putting subsequent bond payments in jeopardy of default since Argentina has said it won’t obey the court orders to pay creditors Fernandez has dubbed “vultures.”
‘Serial Payers’
The debt swap would be offered into local law debt in the same terms and currency as original bonds, according to Fernandez.
“Instead of recalcitrant debtors, we are serial payers,” Fernandez, 60, said in her speech, adding that the country has paid about $174 billion in debt since 2003. “The ruling ignored the country’s accords reached with 93 percent of holders of defaulted debt.”
She also said the ruling invalidates future debt restructurings and asked God to “illuminate” the U.S. high court.
The changing of jurisdiction on performing debt governed by international law will be voluntary and dependent on the outcome of the nation’s request for the Supreme Court to take their case, a government official, who isn’t authorized to speak publicly about the plans, said in an interview. The re-opening of the swap is intended to show the Supreme Court the nation’s willingness to pay, he said.
‘Most Pragmatic’
The Supreme Court grants only one percent of about 8,000 petitions it receives every year.
“This is the most pragmatic thing they could have done,” said Alberto Bernal, head of fixed-income research at Bulltick Capital Markets in Miami. “It’s good news for bonds because it shows total willingness to pay, even if Argentina is trying to circumvent U.S. courts.”
Banks from Credit Suisse Group AG to Barclays Plc say that investors should buy local-law bonds, which are exempt from the court orders, as default risk for debt sold abroad increases after Argentina’s appeal was rejected.
“We recommend only the shortest local-law bonds in Argentina,” said Daniel Chodos, a strategist at Credit Suisse, said in a telephone interview from New York, referring to dollar notes due 2013 and 2015. “The ruling states that the order is for the exchange bonds, which were sold under foreign law, so local law bonds shouldn’t be involved.”
‘Right Mind’
Investors will probably switch to the 2015 bonds after the government pays $2 billion of principal on the 2013 bonds next month, giving the longer notes additional support, Chodos said.
“Nobody in their right mind would resign New York protection for Argentine law,” Jorge Piedrahita, chief executive officer of Torino Capital LLC in New York, said in an e-mail. “Payments would be easily embargoed by Elliott and there’s the risk of having to get the money out of Argentina.”
Argentina in 2001 defaulted on a record $95 billion of foreign debt. Holders of about 91 percent of the bonds agreed to take new exchange bonds in 2005 and 2010, at about 30 cents on the dollar. Creditors including billionaire Paul Singer’s Elliott Management Corp. have rejected the swaps.
Fernandez last week reassured bond investors that she won’t change terms on securities sold under Argentine legislation after the central bank set aside $2.3 billion for debt payments this year, of which $2 billion are for local law.
‘Important Message’
“It’s an important message to the international community because we are paying local-law maturities,” she said in an Aug. 21 speech. “We haven’t changed the terms in local law debt in 10 years and won’t start to.”
Argentina’s vow to continue paying performing bonds regardless of the court ruling had spurred speculation the government will change legislation of its New York-law exchange bonds to a jurisdiction outside the U.S.
The extra yield investors demand to own Argentine bonds over U.S. Treasuries widened 33 basis points, or 0.33 percentage point, to 1,108 basis points today, according to JPMorgan Chase & Co. data.
Argentina’s five-year credit default swaps, contracts insuring the nation’s debt against non-payment, rose 265 basis points to 2,745 basis points at 2 p.m. New York time, according to data compiled by CMA Ltd. The peso fell 0.2 percent to 5.6427.
‘Pesofication’ Risk
Still, the fastest decline in central bank reserves since 2001 is spurring concern Argentina will pay its local law bonds in pesos, a process known as “pesofication.” The fair value of Argentine government bonds due 2015, called Boden 15, is 87.2 cents per dollar, compared with yesterday’s price of 95.15, according to an Aug. 9 Citigroup Inc. report.
Argentina has $15.3 billion of dollar debt due by the end of 2015 including interest, compared with $36.9 billion of reserves as of yesterday. Reserves are on track to fall to $25 billion by the end of 2015, according to Citigroup.
South America’s second biggest economy will have enough foreign currency funds to continue making payments on dollar bonds in the next three years, Barclays Plc analyst Sebastian Vargas said in a telephone interview from New York.
“We’re keeping our market weight position and reiterating our recommendation to buy Boden 15,” Vargas said. “Instead of pesofying you could simply not even pay a dime and kick the payments five years down the road. Why would you pesofy? Instead of pesofying you would simply forcibly restructure debt, but that is not in the cards.”
6. ANALYSIS: ARGENTINA PLAYS FOR TIME IN DEBT FIGHT, SEEKS ESCAPE (Reuters News)
By Guido Nejamkis
August 27, 2013
(Reuters) – Argentina’s efforts to avoid a debt default could drag on for another year or more as it fights “holdout” bondholders to the bitter end in U.S. courts and simultaneously looks to side-step any final ruling ordering it to pay up.
President Cristina Fernandez is pursuing a raft of new appeals to keep a technical default at bay, even as she readies a voluntary debt swap to take effect when other options run out.
The government last week lost its appeal of a New York court order requiring it to pay $1.33 billion to hedge funds that refused to restructure bonds after Argentina’s record $100 billion default in 2002.
Fernandez insists her government will not pay the holdouts, but defeat in the courts could also block payments to bondholders who took part in the 2005 and 2010 restructurings. That would trigger a technical default on some $28 billion of foreign debt.
Seeking to avoid that, Fernandez is now proposing a new swap of foreign debt for bonds payable in Buenos Aires that would protect bondholders who accept the exchange by moving them beyond the reach of U.S. law.
A senior government source told Reuters the debt swap would only be pursued if Argentina’s court appeals are unsuccessful.
Even then, it would only take a handful of bondholders unwilling to accept Argentine capital controls, or unable to invest in assets outside New York, to leave some restructured bonds vulnerable to another default.
That would mean the second debt crisis in a little more than a decade for South America’s third biggest economy, which is struggling with high inflation and a poor business climate caused by heavy trade and foreign exchange controls.
Economy Minister Hernan Lorenzino says the government is pursuing three avenues to keep its legal fight alive. These include asking the three-member panel of the 2nd U.S. Circuit Court of Appeals in New York to reconsider its own decision; appealing the ruling to the full 13-judge appeals court; or appealing Friday’s decision to the U.S. Supreme Court.
“We are going ahead with all necessary appeals,” Lorenzino told local television on Sunday.
Whether or not the appeals are successful, they are also aimed at extending the stay order that protects payments on restructured bonds. Daniel Kerner of the Eurasia Group political risk consulting firm says they could delay resolution of the case for between six and 15 months.
Argentina has already asked the U.S. Supreme Court to review the original decision on which the appeals court based its ruling, and the top court as yet to decide whether or not to hear that case.
But the latest ruling might give Argentina another chance to appeal to the Supreme Court. First, Argentina has nearly three weeks to ask for a rehearing from the same judges who rendered Friday’s ruling, as well as a new hearing “en banc” before all 13 judges on the 2nd Circuit Court of Appeals.
Both requests face long odds, but a rejection of Argentina’s “en banc” appeal would give the country 90 days to make a second appeal to the Supreme Court. That could push a final decision deep into 2014.
“The Supreme Court will take a month or two to request an opinion from the Solicitor General, which would take two to six months to give one. Then it’s usually resolved within 60 days (whether to hear the case),” said attorney Marcelo Etchebarne, a partner with Cabanellas Etchebarne Kelly in New York.
The chances are slim of a hearing before the Supreme Court, which usually hears fewer than 100 of the roughly 10,000 cases in which it is petitioned each year.
JUDGES’ RESTRAINT
Argentina has so far avoided a final reckoning thanks to the restraint shown by judges. The appeals court surprised some observers last week with a stay order delaying implementation of its decision pending review by the Supreme Court.
But it is unclear how much longer U.S. courts will tolerate the defiance of the South American nation that 2nd Circuit Judge Barrington Parker called a “uniquely recalcitrant debtor.”
“Argentina’s officials have publicly and repeatedly announced their intention to defy any rulings of this Court and the district court with which they disagree,” Parker wrote in the decision rebuking the country on Friday.
The country’s attempt to move its sovereign debt beyond the reach of U.S. law is just the kind of maneuver courts have specifically warned against, lawyers said, raising the risk that judges could reconsider their stay order.
Were the Supreme Court to eventually take up the case, it could demand that Argentina set aside some $1.5 billion in escrow to ensure it obeys an eventual ruling. President Fernandez has so far refused any commitment that could satisfy the demands of the holdout creditors she calls “vulture funds.”
If the Supreme Court turns down the case or Argentina refuses its conditions for a hearing, the lower court’s decision would oblige the country to pay holdout creditors in full when they make their next bond payment.
The ruling is a vindication for dissident bondholders led by Aurelius Capital Management and NML Capital Ltd, a unit of Paul Singer’s Elliott Management Corp, who are demanding full payment. They have argued that Argentina cannot deny them their due while paying investors who agreed to restructurings.
But the 93 percent of bondholders who renegotiated debts after Argentina’s 2002 default, accepting less than 30 cents on the dollar, now worry that the refusal to pay holdouts in the face of court orders could freeze payments on restructured bonds as well.
Argentina has promised to keep paying obligations on its restructured debt. Lorenzino said on Sunday that the country would continue paying holders of those bonds “on the same terms, in the same currency, over the same period.”
“We’re going to keep paying as we have until now, on the same terms,” Lorenzino told a state news agency on Saturday, calling the previous day’s appeals court ruling “an attempt to bring the country back to 2001.”
7. ARGENTINA COUNTRY RISK RISES AFTER PROPOSED DEBT SWAP (Reuters News)
By Walter Bianchi and Brad Haynes
August 27, 2013
(Reuters) – Argentina’s debt insurance costs and bond yields rose on Tuesday, as the country’s attempt to move its sovereign debt beyond the reach of foreign law risked aggravating U.S. judges in a legal battle with holdout bondholders.
President Cristina Fernandez offered late on Monday to exchange foreign debts for bonds paying in Buenos Aires, in a move that may skirt a U.S. court decision requiring it to pay the holdouts $1.3 billion.
“The fear is that Argentina is trying to avoid the court’s ruling,” said Alejo Costa, the head of strategy at investment bank Puente, based in Buenos Aires. “If Argentina tries to defy the court and judges lift their stay order, we have a problem.”
Argentina has so far avoided a potential debt crisis thanks to judges’ restraint. Last week a U.S. appeals court surprised some observers with a stay order delaying implementation of its decision pending review by the Supreme Court.
Refusing to pay holdouts despite court orders could block Argentina’s payment of the 93 percent of bondholders who participated in the country’s 2005 and 2010 restructurings.
Five-year credit default swaps rose 350 basis points early on Tuesday and the country’s risk premium rose 23 basis points to 1,098 basis points, according to J.P.Morgan’s EMBI+ index. The risk premium represents the spread in the yield between the Argentine bonds and comparable U.S. Treasuries.
Argentina’s dollar-denominated discount bond fell 3 percent in the Buenos Aires over-the-counter market.
8. ARGENTINA BOND-SWAP PLAN SENDS DEBT-SECURITIES PRICES PLUNGING (Dow Jones News Service)
By Shane Romig
27 August 2013
BUENOS AIRES–A ploy by Argentina’s government to try to pay creditors by circumventing U.S. court orders sent most of the country’s debt securities prices plunging on Tuesday.
In the latest move in a decade-old legal saga over the country’s momentous 2001 default on about $100 billion of debts, President Cristina Kirchner on Monday said the government will offer to pay its investors in Buenos Aires rather than in New York. It also plans to reopen for a second time the debt swap, allowing investors holding old defaulted bonds to trade in for new bonds, at a hefty discount.
The move was in response to U.S. Second Circuit Appeals Court ruling last week affirming a judgment blocking Argentine payments in New York on new bonds issued as part of the debt swap unless it also settles the $1.33 billion plus interest it owes to holdout creditors. The block is on hold pending an appeal to the U.S. Supreme Court.
Owners of the new bonds have a tough choice to make: either agree to receive their money in Buenos Aires instead of in New York, or face the possibility that Argentina might not be able to keep making payments on the New York bonds.
Argentina’s currency controls, limits on getting dividends out of the country, and shifting policies also add a significant level of risk compared to New York bond laws. There’s also a risk that U.S. courts seek to block Argentina’s attempts to move payments to Buenos Aires, potentially making creditors who make the switch liable for contempt of court. District Judge Thomas Griesa has issued an order prohibiting anyone from participating in Argentine maneuvers to skirt his rulings.
“The last thing we would consider would be swapping New York law bonds for Argentina local law bonds,” said Jim Craige, portfolio manager at Stone Harbor Investment Partners LP, which holds a “negligible” amount of Argentina’s defaulted debt but none of the swap bonds. “I’m not sure if they’re going to pay us in soybeans or pesos but it’s probably not going to be dollars.”
Analysts said the proposed swap may give holdouts all they need to go to the appeals court and ask it to lift its stay. Then it becomes a question of whether anyone in New York is willing to help Argentina carry out the swap and risk being accused of violating the court order.
“If the stay is lifted, I don’t see who is going to carry the water for them in New York and at what price,” said Anna Gelpern, professor of law at Georgetown University and a fellow at the Peterson Institute for International Economics.
The cost to insure Argentina’s sovereign debt against default rose to $2.804 million a year for five years to protect $10 million of debt, from $2.475 million a year late Monday, according to data provider Markit.
In the 2005 and 2010 swap offers, about 93% of the old bonds were tendered, with investors accepting losses of about two-thirds of face value.
The outstanding 7% are held by the holdout creditors led by Aurelius Capital Management and Elliott Management Corp.’s NML Capital Ltd., which are expected to continue pursuing their demands in U.S. courts.
A spokesman for NML declined to comment on Tuesday. Aurelius could not be reached for comment.
Despite the worries, some investors took heart at the payment assurance.
“I’d rather get paid in dollars in Argentina rather than get paid nothing in New York,” said Ray Zucaro, portfolio manager and managing principal at SW Asset Management LLC. Mr. Zucaro’s firm has $375 million under management and holds some Argentine securities known as GDP warrants. He said his company would likely participate in the proposed swap.
“The government is reopening the swap not to escape from U.S. legislation but to protect the investors who participated in the previous swaps in 2005 and 2010,” said Aldo Pignanelli, a former president of the Central Bank of Argentina. “This clearly shows the government wants to continue paying them.”
Argentina will likely be able to sway more holders of defaulted bonds to accept the new swap, perhaps taking the acceptance rate over 95%, Alberto Bernal-Leon, head of research at Bulltick Capital Markets, said in a note. The move “shows pragmatism from the government,” Mr. Bernal-Leon said. “We continue to contend that Argentine bonds will outperform its emerging market peers this year by a very wide margin.”
Other holders of Argentina’s restructured bonds are waiting to see the details of the swap implementation before deciding if the move is positive or negative for overseas bondholders.
“It could go one way or the other,” said Emilio Ilac, managing director of institutional clients at investment bank Puente. Puente submitted a brief to the U.S. appeals court arguing that payment shouldn’t be blocked to bondholders who accepted the restructuring.
9. ARGENTINE PRESIDENT, SPURNING US COURTS, SAYS HOLDERS OF BAD DEBT CAN COLLECT IN BUENOS AIRES (AP Newswire (Government Feed))
By Debora Rey
26 August 2013
BUENOS AIRES, Argentina (AP) – Argentina’s president revealed Monday night how she’ll try to defy U.S. courts that have ruled against her government in a decade-long, billion-dollar legal fight over debts that have been unpaid since the country’s world-record, $100 billion default.
Rather than comply with Friday’s unanimous ruling ordering her government to pay $1.4 billion in cash to a group of plaintiffs she calls “vulture funds,” President Cristina Fernandez is proposing another debt swap: offering new bonds to be paid in dollars in Buenos Aires to anyone still holding defaulted debt.
Fernandez made the announcement in a surprise address to the nation, saying the U.S. federal appellate judges were unfair to label Argentina a deadbeat. She said Argentina has made $173 billion in debt payments since 2003 and will pay $2 billion more on Sept. 12.
“Rather than `recalcitrant debtors,’ we are serial payers,” she said.
The proposal she is sending to congress Tuesday is her long-awaited “Plan B” for answering court rulings requiring Argentina to first pay cash to a small fraction of “holdouts” who sued rather than join the more than 92 percent of bondholders who provided Argentina with billions of dollars in debt relief in 2005 and 2010. Those who joined in the debt swap have been paid ever since.
Friday’s court ruling seemed to leave Fernandez with no wiggle room: If she keeps refusing to pay the holdouts, Argentina’s payments to those who accepted previous swaps will be embargoed by the U.S. financial system, forcing the country into another default.
Argentina has filed a long-shot appeal to the U.S. Supreme Court, but meanwhile Fernandez is proposing that any bondholders who haven’t been paid, or who fear that their current payments will get held up, can trade their New York-law bonds for new bonds whose contracts will be enforced under Argentine law.
“We can’t keep the country under a `Sword of Damocles,'” she said. “The first decision we made is to ask God to shine down on the United States Supreme Court.”
“We’ve made two more decisions: Tomorrow we’re going to send a proposed law to Congress … to open for the third time the debt swap, for the 7 percent that haven’t entered. We want to face up to the promises of Argentina.”
She said bondholders who have worked with Argentina will be able to trade their current bonds for new ones under the same payment terms, but paid in Argentina rather than New York.
“Those who have Argentine bonds, we are going to replace these with similar bonds, in foreign currency, and under the same terms, but paid here in Argentina,” she said.
Analysts have predicted that any attempt to pay bondholders in Buenos Aires rather than comply with the U.S. courts will fail, reasoning that few bondholders who now can turn to courts in New York in any dispute with Argentina’s government will be willing to risk a change that makes Argentine courts the final arbiter.
10. ARGENTINA OFFERS BOND SWAP TO SKIRT U.S. COURT RULINGS (HedgeWorld News)
By Alejandro Lifschitz and Brad Haynes
27 August 2013
BUENOS AIRES, Argentina (Reuters)—Argentina’s government is proposing a voluntary bond swap on its foreign debt, shifting payments to Buenos Aires, if it cannot overturn U.S. court rulings that threaten to trigger its second debt crisis in just over a decade.
The bond swap would allow Argentina to keep paying the creditors who agreed to restructure the country’s sovereign debt after a record $100 billion default in 2002, President Cristina Fernandez said in a televised address on Monday night [Aug. 26].
Investors in international markets would have the option to swap their foreign debt for Argentine bonds if ongoing appeals of the U.S. court rulings are rejected, a government source told Reuters on condition of anonymity.
Argentina on Friday [Aug. 23] lost its appeal of a U.S. court order requiring it to pay $1.33 billion to “holdout” hedge funds that refused steep discounts following the 2002 default.
If Argentina refuses to pay off the holdouts in full, the ruling could block payment overseas to the 93 percent of bondholders who accepted restructurings in 2005 and 2010 that give them less than 30 cents on the dollar.
In a direct plea to the U.S. Supreme Court, Ms. Fernandez urged justices to overturn the decision, which she warned could undermine future sovereign debt restructurings. She also proposed a third restructuring of Argentina’s defaulted debt, offering holdouts another opportunity at the terms offered in the 2010 bond swap.
Her more conciliatory tone contrasted sharply with her past denunciations of the so-called “vulture funds” she accuses of trying to bankrupt the country. That defiant attitude had drawn the ire of judges in the United States, who fault Argentina for a lack of good faith negotiation with creditors.
Still, Ms. Fernandez insisted that her government was meeting its obligations and rejected one appeals court judge’s description of Argentina as a “uniquely recalcitrant debtor.”
“I would say that rather than ‘recalcitrant debtors’ we are serial payers,” she said. “Just as the country entered the Guinness (World Records) for the biggest sovereign debt default, we should also be in the Guinness among the countries that have most fulfilled our obligations over the past 10 years.”
In the 2005 and 2010 restructurings, Argentina issued international debt under New York, British and Japanese law. But Ms. Fernandez’s proposal of a new bond swap raised questions about whether investors would be interested in taking Argentine bonds in lieu of foreign debt, given strict currency and capital controls that the left-leaning Ms. Fernandez’ government has imposed.
“Changing the location of the payments to Buenos Aires is going to be extremely complicated amid the currency controls,” said Jorge Todesca, a former deputy economy minister who is now head of the Finsoport economic consultancy. “Argentina will never be able to issue public debt abroad if it continues trying to dodge a settlement. We can assume Argentina will continue to be financially isolated from the rest of the world as long as this goes on.”
The president said she would send a bill to Argentina’s Congress on Tuesday [Aug. 27] in order to offer remaining holdouts the same terms as the restructured debts.
“I expect some holdouts to take this opportunity and tender their defaulted debt,” said Alberto Bernal, head of emerging markets at Bulltick Capital Markets in Miami. “The hardcore litigants will remain out of the swap.”
Mr. Bernal called the proposal to swap foreign debt for bonds paying in Buenos Aires a “pragmatic” move, adding that it would be easier than getting the necessary number of bondholders to agree on changing covenants of existing bonds.
11. ARGENTINA ECONOMY: QUICK VIEW – ARGENTINA TO REOPEN DEBT SWAP (Economist Intelligence Unit – ViewsWire)
27 August 2013
Event
In late August a US appeals court upheld the ruling of a New York court, which forces Argentina to repay litigant “holdout” creditors (who did not accept the terms of debt restructurings in 2005 or 2010) in full. The government has responded by announcing a reopening of the 2010 debt exchange.
Analysis
The US appeals court decision will not be enforced until the US Supreme Court decides whether it will take up a request by Argentina to review the case. Legal experts have suggested that the Supreme Court is unlikely to reverse the appeals court decision, and may not take up the case. Probable delays in the legal process mean that a decision is unlikely before early 2014.
In the interim period, the government appears to be trying to encourage holders of restructured debt voluntarily to agree to exchange their bonds issued under New York law for local jurisdiction bonds. Although Argentinian officials have suggested that they want the 7% of creditors who had not yet restructured their debts to join in the swap, this is extremely unlikely, especially after the US appeals court decision in favour of litigant holdouts. Instead, the authorities appear to be attempting to avoid payment disruptions to current creditors in the likely event that Argentina refuses to comply with an unfavourable court ruling.
By agreeing a voluntary restructuring, Argentina will hope to avoid a technical default. However, it is unclear whether the swap of foreign-jurisdiction bonds with local-jurisdiction bonds (terms that would be considered prejudicial)-when the alternative appears to be non-payment of New York law bonds-constitutes a voluntary restructuring.
12. ARGENTINA THUMBS NOSE AT U.S. COURTS WITH NEW DEBT SWAP OFFER (Dow Jones Top Global Market Stories)
By Shane Romig
27 August 2013
BUENOS AIRES — Argentina’s third debt swap offer since its momentous 2001 default on about $100 billion sent bond prices slumping Tuesday after the government vowed to pay creditors who accepted earlier swaps but refused to offer anything more to holdouts who rejected the restructuring deals.
The maneuver is seen as an attempt by the government to circumvent U.S. court orders in a decade-old legal saga. Argentina is trying to make payments on new bonds held by investors that have accepted two previous debt swaps while trying to avoid paying the committed group of so-called “holdout” creditors who are demanding repayment in full on the old bonds.
Investors holding the new bonds face a tough choice: either agree to receive their money in Buenos Aires, instead of in New York, or face the likelihood that Argentina will stop making payments on the New York bonds altogether.
The cost to insure Argentina’s sovereign debt against default rose to $2.804 million per year for five years to protect $10 million of debt, from $2.475 million per year late Monday, according to data provider Markit.
The losses overseas stem from a U.S. court decision in which Argentina was told it cannot make any payments on the new bonds unless it also settles the $1.33 billion plus interest it owes on the old bonds. An appeal is pending at the U.S. Supreme Court.
Late Tuesday, Argentina’s President Cristina Kirchner said the new proposal would allow investors that currently receive payment on their new bonds in New York to continue to be paid under identical terms in Buenos Aires.
At the same time, the president also said Argentina would reopen the bond swap first carried out in 2005, under identical terms.
In the 2005 and 2010 swap offers, about 93% of the old bonds were tendered, with investors accepting losses of about two-thirds of face value. The outstanding 7% are held by the holdouts.
The new swap offer “shows our profound commitment to paying our debt to bondholders,” Mrs. Kirchner said in a televised speech Monday.
Investors holding the old, defaulted bonds are likely to continue to pursue their demands through U.S. courts.
“The last thing we would consider would be swapping New York law bonds for Argentina local law bonds,” said Jim Craige, portfolio manager at Stone Harbor Investment Partners which holds a “negligible” amount of Argentina’s defaulted debt but none of the swap bonds. “I’m not sure if they’re going to pay us in soybeans or pesos but it’s probably not going to be dollars.”
Investors holding the new bonds face a choice between a possible default in New York, or the tight currency controls and political uncertainty in Argentina.
While currently they would be able to repatriate the bond payments made in Buenos Aires, those currency controls in Argentina and recent limits on companies getting dividends out of the country give pause for thought, said Goldman Sachs economist Alberto Ramos. “Things can change [and] what safeguards are there that two or three years down the road” those bonds won’t be converted into pesos or requirements imposed to keep the money inside Argentina, Mr. Ramos said.
“I’d rather get paid in dollars in Argentina rather than get paid nothing in New York,” said Ray Zucaro, portfolio manager and managing principal at SW Asset Management. Mr. Zucaro’s firm has $375 million under management and holds some Argentine securities know as GDP warrants. He said that would likely participate in the proposed bond swap.
Analysts said the swap for the new bonds from New York to Buenos Aires would be enormously complex, and risks a reaction from U.S. courts. The 2nd U.S. Circuit Court of Appeals has ordered Argentina to pay a group of holdout creditors led by Aurelius Capital Management and Elliott Management Corp.’s NML Capital Ltd.
A spokesman for NML declined to comment on Tuesday.
The U.S. courts might seek to block Argentina’s attempts to switch payments to Buenos Aires, potentially making creditors who take new bonds for the old ones liable for contempt of court. Judge Thomas Griesa has issued an order prohibiting anyone from participating in Argentine maneuvers to skirt his rulings.
The swap also opens up the potential of creating a new group of holdout creditors who refuse to exchange the New York bonds for Argentine ones and can sue in the U.S. if the country defaults on the New York bonds.
Current holders of Argentina’s restructured bonds are waiting to see the details of the swap implementation before deciding if the move is positive or negative for overseas bondholders.
“It could go one way or the other,” said Emilio Ilac, managing director of institutional clients at one of Argentina’s largest investment banks, Puente. Puente submitted a brief to the U.S. appeals court arguing that payment shouldn’t be blocked to bondholders who accepted the restructuring.
While skepticism abounds, others took heart at the government’s attempts to ensure payment to creditors who accepted the swaps.
“The government is reopening the swap not to escape from U.S. legislation but to protect the investors who participated in the previous swaps in 2005 and 2010,” said Aldo Pignanelli, a former president of the Central Bank of Argentina. “This clearly shows the government wants to continuing paying them.”
Argentina will likely be able to sway more holders of defaulted bonds to accept the new swap, perhaps taking the acceptance rate over 95%, said Alberto Bernal-Leon, head of research at Bulltick Capital Markets, in a note. The move “shows pragmatism from the government,” Mr. Bernal-Leon said. “We continue to contend that Argentine bonds will outperform its emerging market peers this year by a very wide margin.”
13. ARGENTINA’S SOVEREIGN DEBT INSURANCE COSTS RISE (Dow Jones Global Equities News)
By Erin McCarthy
27 August 2013
The cost to insure Argentina’s sovereign debt against default rose Tuesday as markets digested the country’s plans to let investors swap foreign-law bonds for new debt.
The bond swap plans, announced by President Cristina Kirchner Monday, come as the government deals with the fallout from a U.S court decision last week that ordered Argentina to pay a group of so-called holdout bondholders 100% of the roughly $1.33 billion they are owed in principal and accrued interest.
But market reaction reflected uncertainty about how Argentina would actually execute the plan.
“It’s not enough to announce the intention. We need a proposal that explains how this works,” said Siobhan Morden, head of Latin America research at Jefferies. “Until we have those details, we’re going to trade on that execution risk.”
The cost to insure Argentina’s sovereign debt against default rose to $2.667 million per year for five years to protect $10 million of debt, from $2.475 million per year late Monday, according to data provider Markit.
14. ARGENTINA PLANS NEW TAX ON TRADING OF PRIVATE-COMPANY SHARES (Dow Jones Global Equities News)
27 August 2013
BUENOS AIRES–Argentina will slap a pair of new taxes on investments to make up for the increase in the minimum income threshold for low-income workers subject to income tax.
The government plans to impose a new 10% tax on dividend payments and a 15% tax on foreigners buying local securities of companies not listed on the local exchange, said the head of the federal tax agency, Ricardo Echegaray.
The government plans to send a bill to congress for the new taxes, which involve a 15% duty for “buying and selling of shares and securities that aren’t listed on at the exchange,” the tax agency Afip said in a statement. That tax should raise ARS697 million ($124 million), according to Afip.
In addition, “the 10% tax on dividends that companies distribute to shareholders will contribute ARS1.359 billion a year,” Afip said.
While the details of the bill still aren’t clear, in principle, this exempts publicly traded companies and investments, said Ezequiel Estrada, head of research at Bull Market Brokers.
The increased revenue is designed to make up for a rise in the minimum income threshold subject to income tax. The minimum salary that will be subject to tax was raised to 15,000 pesos, from ARS8,300 for a single worker and ARS11,563 for a worker supporting a family.
15. ARGENTINE ECONOMY SEEN SLOWING DOWN AFTER Q2 REVIVAL (Business News Americas)
27 August 2013
The Argentine economy is likely to have seen a significant acceleration in the second quarter but is poised to slow down after the mid-term congressional elections in October, according to estimates from Capital Economics.
The London-based research firm’s own Argentina Activity Indicator (AAI) points to a 3.0% year-on-year expansion in 2Q13, up from around 0.5% in the first quarter, the firm said in a report.
As a result of the lack of credibility surrounding the official figures that the government provides through the country’s statistics agency (Indec), Capital Economics created the indicator to track the performance of Argentina’s economy. The AAI uses data from a range of independent sources for its economic growth estimations.
Indec has not yet published its 2Q13 figures.
Moving forward, the latest indicators suggest that the recent revival in Argentina’s economy continued in early 3Q13, but beyond this the growth outlook is far less certain, Capital Economics said.
The firm notes that the Argentine economy has been supported by a pre-election fiscal loosening – financed by printing money – ahead of the mid-term elections. In addition, there is the risk of a sovereign debt default.
“With this support likely to be withdrawn, or at least scaled back, after October’s congressional elections, we expect the pace of growth to slow once again heading into 2014.”
SECOND QUARTER REVIVAL
There has been some evidence of improvement in all major sectors in the second quarter, said Capital Economics, which pointed out that output in Argentina’s important agriculture sector has now fully recovered from the 2012 drought, with this year’s harvest expected to reach a record 105Mt.
Data points to the construction sector growing over 5% in 2Q13 after a 3% contraction in the previous quarter, while the manufacturing sector likely expanded around 3.5% in the second quarter after shrinking in year-on-year terms for the previous four quarters, the report said.
Capital Economics also noted that service sector activity continues to pick up slowly with the economic research consultancy’s own services proxy – based on a range of household and labor market indicators – growing 2.5% in the second quarter compared to 2.0% in 1Q13.
16. ARGENTINA, URUGUAY CALL FOR SOUTH AMERICAN ENERGY INTEGRATION (Platts Commodity News)
By Charles Newbery
27 August 2013
Buenos Aires (Platts)–27Aug2013/423 pm EDT/2023 GMT (Updating to add agreement signed by ANCAP, YPF)
The presidents of Argentina and Uruguay called Tuesday on neighboring countries in South America to pursue energy integration and self-sufficiency to sustain economic growth in the region.
An “energy ring in South America is central for our development,” Argentine President Cristina Fernandez de Kirchner said in a televised address at the opening of two hydrodesulfurization units at the 50,000 b/d La Teja oil refinery in Montevideo, Uruguay.
Argentina’s state-run energy company YPF built the $400 million units for Uruguay’s state-owned ANCAP, helping to reduce sulfur content in diesel by 99.5% and in gasoline by 85% at the refinery.
Fernandez de Kirchner said the joint effort is a sign of energy integration in the region. She added that more energy is needed for economic development in both countries, which she described as having “marvelous land” for agriculture production.
“We need to add value to everything we do,” she said. “This is impossible without energy, and that is why the energy ring is key.”
Uruguayan President Jose Mujica echoed the call for regional energy integration.
“The weak must come together with their peers to be something and be someone in the world or we are nothing,” he said.
Neither specified any other projects that could form part of this energy integration, though ANCAP and YPF Tuesday signed an agreement to study joint projects.
The companies will seek “to optimize energy development in both countries,” ANCAP said in a statement.
The companies will create a task force “to analyze future agreements,” according to the memorandum of understanding signed by ANCAP President Raul Sendic and his YPF counterpart, Miguel Galuccio.
A possibility is for Uruguay to sell excess supplies of LNG from a floating regasification terminal to be built off the coast of Montevideo, ANCAP said. The terminal will have a send-out capacity of 10-15 million cubic meters/d and will start receiving cargoes as soon as March 2015, according to ANCAP.
17. FALKLAND FRONTRUNNERS LEFT OFF ARGENTINA’S 20-YEAR BAN (Business News Americas)
27 August 2013
Argentina has banned four oil and gas companies involved in offshore exploration near the Falkland Islands, though the two firms involved in the archipelago’s first commercially viable discovery were not mentioned.
Falkland Oil and Gas (AIM: FOGL), Borders & Southern Petroleum (AIM: BOR), Argos Resources (AIM: ARG.L) and Desire Petroleum (AIM: DES) were banned from operating in Argentine territory for the next 20 years via official decree.
No mention was made of junior explorer Rockhopper (AIM: RKH) or Premier Oil (LSE: PMO) to whom Rockhopper farmed-out 60% of its licenses in the North Falklands basin in 2012, including the archipelago’s first commercially viable discovery Sea Lion.
Rockhopper and Premier, both of which recently upped their initial production expectations, were, however, mentioned in Argentina’s blacklist in June.
Argentina, which fought and lost a 74-day war with the UK in 1982 over the sovereignty of the islands, claims the firms require approval from Argentine authorities given the Falkland basins sit on the Argentine continental shelf, which the country claims as national territory.
Despite Argentina’s threats of legal action against E&P firms, Stephen Luxton, director of the Falkland Islands’ Department of Mineral Resources, recently told BNamericas that the pressure has not materially affected development, however, companies with interests in Argentina are inevitably not that keen on working in the Falklands.
In related news Argos Resources (AIM: ARG) is pursuing a farm-out partner for its PL001 production license, adjacent to the Sea Lion discovery, in order to further exploration drilling, chairman Ian Thomson said in the company’s latest half-year report. The junior posted a US$1.2mn loss in the first half of 2013 compared to a US$0.8mn loss in 1H12.
Argos’ most up-to-date competent persons report for its 1,126km2 licensed area describes 52 prospects and 40 leads with a total unrisked potential of 3.1Bb of prospective recoverable resources in the most likely case and more than 10Bb in the upside case.

INSEGURIDAD INFLACIONISTA CRISTINISTA

29 agosto, 2013

El final de un fascismo mas se acerca en Argentina. Sin moneda creíble, la hiperinflación nos espera a corto tiempo, apenas se produzcan las elecciones intermedias a fines de octubre de 2013. Algo peor que la hiperinflación es tener que seguir desgobernados por una viuda heredera del poder de su extinto marido, que ha demostrado incapacidad para gobernar el país en beneficio de la gente. Peronismo sigue siendo fascismo, y el fascismo sigue siendo incapaz y ladrón. Prohibir compraventa de dólares acelera la desconfianza, la gente mayoritariamente advierte el fracaso kirchnerista peronista cristinista, y el “modelo mentiroso” vuelve a terminar. Dejando a los pobres mas pobres, y a los gobernantes mucho mas ricos, asegurándose la impunidad. Como siempre sucede en Argentina,  los presidentes corruptos no van a la cárcel, y por suerte tampoco corren peligro de ser heridos por las turbas molestas. Viajan en avión o helicóptero, para escapar a los insultos del pueblo ultrajado.

VIVIR SIN MONEDA NI AHORRO NACIONAL

Los economistas argentinos son los culpables de aceptar puestos en los gobiernos fascistas, y luego de un tiempo prudente, renuncian o son expulsados, y luego aparecen como opositores, pero durante sus periodos administrativos han medrado demasiado. Algunos jóvenes lucen como play boys, y tienen los medios económicos suficientes, generalmente no heredados, sino acumulados por ellos en las sombras. Peronismo honesto a nivel Gobernadores de Provincia es difícil encontrar, aunque se dice que los hermanos Rodriguez Saa no son bandidos y sus gobernados los siguen apoyando, porque fueron la excepción que confirma la regla, o bien, las ovejas negras dentro de una majada corrupta e incapaz. Por eso se los respeta en la Provincia de San Luis, y su partido político sigue ganando elecciones populares,. siendo peronistas.

Pero peor que la deshonestidad de los presidentes y sus empleados economistas, es la incapacidad de comprender que el ahorro nacional y la moneda estable son LA BASE de la permanencia en el poder un Partido Politico. El peronismo merece ser desbancado de la Presidencia en el 2015, por vía de elecciones, ya que parece la norma: luego de un desgobierno peronista o militar (Peron fue exitoso por militar, no por político) el pueblo argentino ha sabido votar contra el peronismo. No en 1958, porque Arturo Frondizi derrotó a Ricardo Balbín comprando con dinero y promesas de leyes fascistas, los votos de los incondicionales peronistas,que eran alrededor de un tercio del caudal de votantes argentinos.

Pero luego de la muerte de Peron y del fracaso del movimiento militar ladrón de Videla y Martinez de Hoz, el pueblo votamos por el partido Radical, aunque degraciadamente Balbín habia muerto dos años antes, y el candidato radical elegido presidente representaba el sector ultra izquierdistra fracasado (corrupto y peronizado) que terminó cuando cometieron la locura de emitir papel moneda en forma compulsiva, para hacer creer que no cobraban impuestos a la gente. Y por corruptos, los radicales perdieron el poder, y eso motivó a que la sociedad eligiese mayoritariamente a un peronista, Carlos Saul Menem, para salir del flagelo hiperinflacionario alfonsinista. Y sorpresivamente, el “turco” Menem lo logró, en tan solo seis meses desde que aplicó la convertibilidad, la hiperinflación alfonsinista cesó. No fue magia: la gente se acostumbró a vivir con moneda seria y a ahorrar en el país, y con eso, Menem logró que la Constitución se reformara, y pudo ser reelecto por cuatro años mas.

Pero al terminar su segundo mandato Menem,  hubo que designar nuevo Presidente. El candidato del radicalismo propuso seguir Argentina manteniendo la convertibilidad menemista, mientras el candidato peronista Eduardo Duhalde sostener que tener moneda estable ligada al dolar era anti  nacional y antipopular. La gente votó sensatamente: triunfó el radicalismo y fue Presidente una persona con salud debilitada que a los pocos meses fue denunciada de pagar sobornos a senadores peronistas para que le aceptaran leyes laborales inútiles. Su vicepresidente, ex filo peronista, renunció, rasgándose las vestiduras. Y el inútil Presidente cayó en manos del  ministro Cavallo, que lo asesoró – supongo – a disponer por decreto  el corralito bancario. Un delito penal que  impidió que los argentinos dispusiesen libremente de sus dineros depositados en el sistema financiero,y eso motivó una serie de protestas, que fue aprovechado por los fascistas duros para expulsar al Presidente radical y reemplazarlo por otro peronista, de aquellos que aman emitir papel moneda inflacionario, porque así se enriquecen.

Así, comenzó la debacle: al digno Adolfo Rodriguez Saa se dice lo amenazaron para que renunciara a la semana de aceptar la Presidencia interina de tres meses, para elegir al sucesor de Fernando de la Rua, cuyo vice presidente había renunciado antes que él. Conclusión: se juntaron los  políticos fascistas, cambiaron la ley de acefalía presidencial, y designaron a Duhalde por dos años, el plazo que le faltaba a de la Rua para terminar su truco mandato. Duhalde fue tan incapaz, que debió irse antes de lo que esperaba, y así surgió Néstor Kirchner, un desconocido gobernador santacruceño que tuvo la suerte de recibir un país tan desgobernado, que era imposible que su economía no mejorase. Sabido es que destruir el papel moneda de un país es la mejor forma de derrotarlo sin necesidad de combatir, dicen lo sostenía Lenin.

Pero al morir Néstor, su viuda no entendió nada, prefirió emitir papel moneda en cantidades crecientes, y negar que la inflación comenzaba. Fueron tan audaces que alteraron los indices de aumentos de precios, que sirven para MEDIR LA VELOCIDAD DE LA DESTRUCCION DEL PAPEL MONEDA NACIONAL. De tres pesos un dolar, con Néstor vivo, , hoy hacen falta casi diez para comprar la misma cantidad de dinero norteamericano. En seis años, la abogada exitosa nos ha hecho perder dos tercios del poder adquisitivo del papel moneda argentino, y ella va por mas, ya que espera que el precio del dolar baje, y amenaza con leyes fascistas para que la gente no compra y venda dolares en el mercado, algo licito, porque la Constitución no lo ímpide.

Pero el problema principal  de la Presidenta no es el doscientos por ciento de inflación durante los cinco años y medio que lleva de Presidenta, sino algo mucho peor: la gente del exterior, comenzando por jefes de Estado de países extranjeros, no le creen. Y tampoco los Jueces de Manhattan, según leemos en los diarios de hoy cuando surge que Cristina está planeando un mecanismo de burlar a la justicia norteamericana intentando cambiar el lugar de pago de los bonos argentinos en default que están sujetos a las leyes del Estado de Nueva York. El caso de una Presidenta Argentina buscando la forma de engañar a la Justicia de la Unión Norteamericana es patético. Recuerdo cuando al Presidente Torrijos, de Panamá, le enviaron helicópteros y marines para capturarlo y apresarlo, para impedir el narcotráfico, y tengo entendido que el ex presidente sigue encarcelado. Si algún Juez norteamericano entiende que Cristina está planeando el delito de burlar a los jueces de Manhattan, podría suceder que se pida a Interpol la captura internacional de nuestra presidenta. Algo parecido a lo que sucedió con nuestra Fragata embargada que recién fue devuelta cuando la Justicia de Manhattan dictó sentencia a favor de los por cristina denostados “Fondos buites”, que no son otra cosa que gente que tiene derecho a cobrar el cien por ciento de lo que Argentina prometió pagar, e intenta incumplir porque la abogada exitosa quizás cree que desafiar a los jueces yanquis le dará mas rédito político, para que su partido político aumente votos en Octubre  próximo, en vez de seguirlos perdiendo por su incapacidad, su  inflación y la corrupción publica y notoria, que la Justicia Suprema argentina todavía no se decide a frenar de cuajo, como sucedería en países serios.

La Presidenta desconcierta. Pareciera jugar todo a cara o cesa, desafiando al imperio, tipo lo que hizo Galtieri cuando ocupó de noche y en forma sorpresiva, la ciudad capital de Malvinas, cuidando no lastimar a los falklanders. A Galtieri el tiro le salió por la culata, perdió el Poder en tres meses porque provocó que las Islas fuesen recuperadas por la Royal Navy con norteamericana. Me pregunto cual sería la reacción mayoritaria del pueblo argentino si Interpol detiene a Cristina Presidenta en cualquiera de los países sensatos que creen en la justicia o que temen al brazo largo de la ley norteamericana. Cristina ladra a Obama, diciendo que no deben molestar a los sirios e  iranies, pareciera que ella también hubiese protestado contra el Presidente Norteamericano cuando se tomó la decisión de apoyar a los británicos y otros países serios, para derrotar a Hitler. La Presidencia de un país en teoría merece respeto, pero cuando los presidentes actúan en forma sospechosa, el desprestigio cunde y para peor, daña al pueblo que cometió el error de haberla votado.

Cristina decía ante las Naciones Unidas que a Galtieri no lo votamos, como excusa por la guerra de Malvinas, pero sigue intentando cosas imposibles, como impedir el veto de las Cinco Potencias que inventaron a las Naciones Unidas, como si todos los países del mundo tuviesen el mismo grado de civilización, poderío y sensatez. Nuestra Constitución tiene los artículos necesarios para impedir que Cristina siga desgobernando y exponiendo al pueblo argentino a penurias graves, como lo es la alta inflación y la hiperinflación. Pero los congresistas están mayoritariamente en el bote presidencial, se enriquecen, y no actúan. Por eso, ella sigue violando leyes, y hasta hoy, nada pasa. Pero luego de Octubre, si ella no cambia su forma de emitir papel moneda en forma delictiva (sin permiso concreto del Congreso Nacional) corre el riesgo de ser considerada fascista peligrosa e incumplidora de la justicia de Manhattan, a la que Argentina se sujetó voluntariamente al pedir dinero prestado, y eso fue obra de Néstor Kirchner. En algún momento, las cosas se pagan. Nestor lo pagó con su vida, demasiado audaz y desafiante.

Cristina ha logrado ser odiada y ridiculizada por la mayoría, por eso su caudal electoral ha desaparecido, no puede ser elegible como Presidenta en el 2015, a lo sumo puede aspirar a Gobernadora de la Provincia de Buenos Aires, o senadora por dicha provincia o diputada, pero incluso si se presenta, corre el riesgo de perder la elección…

¿Porque tantos economistas se acercaron a Cristina, se enriquecieron, y luego reniegan de  ella? Especialmente, los que exhiben su potencia económica y lucen como play boys en gran escala. El post cristinismo hará que sepamos mucho mas acerca de ella, cuando su cargo termine, aparecerán los informes de todos aquellos que la conocieron desde que nació y vivió en Tolosa, hasta el día en que se convirtió en abogada exitosa. Faltan menos de dos años y medio. Espero vivir para enterarme de ciertas cosas que no me cierran, como por ejemplo, el apoyo de su gobierno a los gobernantes que postulan la desaparición del Pueblo de Israel o la destrucción de dicha nación.

ARGENTINE UPDATE – Aug 23, 2013

28 agosto, 2013

RESULTS OF FRACKING (Video)

28 agosto, 2013

 

—– Forwarded Message —–
From: Roy A Harrell <liceretare63@yahoo.com>
To:
Sent: Sunday, August 11, 2013 10:33 PM
Subject: From the Guardian: A Texan tragedy: ample oil, no water
Watch the video . . . these are my neighbors.The Brits have it about right.San Angelo, Midland, Odessa, Abilene-all have water crises.

RAH
Fracking boom sucks away precious water from beneath the ground, leaving cattle dead, farms bone-dry and people thirsty
Suzanne Goldenberg in Barnhart, Texas

Sunday 11 August 2013
The Guardian
—-

A TEXAN TRAGEDY

28 agosto, 2013


Subject: From the Guardian: A Texan tragedy: ample oil, no water
Fracking boom sucks away precious water from beneath the ground, leaving cattle dead, farms bone-dry and people thirsty
Suzanne Goldenberg in Barnhart, Texas

Sunday 11 August 2013
The Guardian
—-
Beverly McGuire saw the warning signs before the town well went dry: sand in the toilet bowl, the sputter of air in the tap, a pump working overtime to no effect. But it still did not prepare her for the night last month when she turned on the tap and discovered the tiny town where she had made her home for 35 years was out of water.
“The day that we ran out of water I turned on my faucet and nothing was there and at that moment I knew the whole of Barnhart was down the tubes,” she said, blinking back tears. “I went: ‘dear God help us. That was the first thought that came to mind.”
Across the south-west, residents of small communities like Barnhart are confronting the reality that something as basic as running water, as unthinking as turning on a tap, can no longer be taken for granted.
Three years of drought, decades of overuse and now the oil industry’s outsize demands on water forfracking are running down reservoirs and underground aquifers. And climate change is making things worse.
In Texas alone, about 30 communities could run out of water by the end of the year, according to theTexas Commission on Environmental Quality.
Nearly 15 million people are living under some form of water rationing, barred from freely sprinkling their lawns or refilling their swimming pools. In Barnhart’s case, the well appears to have run dry because the water was being extracted for shale gas fracking.
The town — a gas station, a community hall and a taco truck – sits in the midst of the great Texan oil rush, on the eastern edge of the Permian basin.
A few years ago, it seemed like a place on the way out. Now McGuire said she can see nine oil wells from her back porch, and there are dozens of RVs parked outside town, full of oil workers.
But soon after the first frack trucks pulled up two years ago, the well on McGuire’s property ran dry.
No-one in Barnhart paid much attention at the time, and McGuire hooked up to the town’s central water supply. “Everyone just said: ‘too bad’. Well now it’s all going dry,” McGuire said.
Ranchers dumped most of their herds. Cotton farmers lost up to half their crops. The extra draw down, coupled with drought, made it impossible for local ranchers to feed and water their herds, said Buck Owens. In a good year, Owens used to run 500 cattle and up to 8,000 goats on his 7,689 leased hectares (19,000 acres). Now he’s down to a few hundred goats.
The drought undoubtedly took its toll but Owens reserved his anger for the contractors who drilled 104 water wells on his leased land, to supply the oil companies.
Water levels were dropping in his wells because of the vast amounts of water being pumped out of the Edwards-Trinity-Plateau Aquifer, a 34,000 sq mile water bearing formation.
“They are sucking all of the water out of the ground, and there are just hundreds and hundreds of water trucks here every day bringing fresh water out of the wells,” Owens said.
Meanwhile, residents in town complained, they were forced to live under water rationing. “I’ve got dead trees in my yard because I haven’t been able to water them,” said Glenda Kuykendall. “The state is mandating our water system to conserve water but why?… Getting one oil well fracked takes more water than the entire town can drink or use in a day.”
Even as the drought bore down, even as the water levels declined, the oil industry continued to demand water and those with water on their land were willing to sell it. The road west of town was lined with signs advertising “fresh water”, where tankers can take on a box-car-sized load of water laced with industrial chemicals.
“If you’re going to develop the oil, you’ve got to have the water,” said Larry Baxter, a contractor from the nearby town of Mertzon, who installed two frack tanks on his land earlier this year, hoping to make a business out of his well selling water to oil industry.
By his own estimate, his well could produce enough to fill up 20 or 30 water trucks for the oil industry each day. At $60 (£39.58) a truck, that was $36,000 a month, easily. “I could sell 100 truckloads a day if I was open to it,” Baxter said.
He rejected the idea there should be any curbs on selling water during the drought. “People use their water for food and fibre. I choose to use my water to sell to the oil field,” he said. “Who’s taking advantage? I don’t see any difference.”
Barnhart remained dry for five days last month before local work crew revived an abandoned railway well and started pumping again. But residents fear it is just a temporary fix and that next time it happens they won’t have their own wells to fall back on. “My well is very very close to going dry,” said Kuykendall.
So what is a town like Barnhart to do? Fracking is a powerful drain on water supplies. In adjacent Crockett county, fracking accounts for up to 25% of water use, according to the groundwater conservation district. But Katharine Hayhoe, a climate scientist at Texas Tech University in Lubbock, argues fracking is not the only reason Texas is going dry – and nor is the drought. The latest shocks to the water system come after decades of overuse by ranchers, cotton farmers, and fast-growing thirsty cities.
“We have large urban centres sucking water out of west Texas to put on their lands. We have a huge agricultural community, and now we have fracking which is also using water,” she said. And then there is climate change.
West Texas has a long history of recurring drought, but under climate change, the south-west has been experiencing record-breaking heatwaves, further drying out the soil and speeding the evaporation of water in lakes and reservoirs. Underground aquifers failed to regenerate. “What happens is that climate change comes on top and in many cases it can be the final straw that breaks the camel’s back, but the camel is already overloaded,” said Hayhoe.
Other communities across a bone-dry south-west are resorting to extraordinary measures to keep the water flowing. Robert Lee, also in the oil patch, has been hauling in water by tanker. So has Spicewood Beach, a resort town 40 miles from Austin, which has been trucking in water since early 2012.
San Angelo, a city of 100,000, dug a pipeline to an underground water source more than 60 miles away, and sunk half a dozen new wells.
Las Cruces, just across the border from the Texas panhandle in New Mexico, is drilling down 1,000ft in search of water.
But those fixes are way out of reach for small, rural communities. Outside the RV parks for the oil field workers who are just passing through, Barnhart has a population of about 200.
“We barely make enough money to pay our light bill and we’re supposed to find $300,000 to drill a water well?” said John Nanny, an official with the town’s water supply company.
Last week brought some relief, with rain across the entire state of Texas. Rain gauges in some parts of west Texas registered two inches or more. Some ranchers dared to hope it was the beginning of the end of the drought.
But not Owens, not yet anyway. The underground aquifers needed far more rain to recharge, he said, and it just wasn’t raining as hard as it did when he was growing up.
“We’ve got to get floods. We’ve got to get a hurricane to move up in our country and just saturate everything to replenish the aquifer,” he said. “Because when the water is gone. That’s it. We’re gone.”
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de DANIEL BALBASTRO

16 agosto, 2013
<h3 “”=”” tabindex=”-1″ id=”yui_3_7_2_1_1376668307947_6446″>HAY TIEMPO DE VIVIR Y TIEMPO RECORDAR: LO Vivido

de Daniel F. Balbastro para 1 destinatario

A MIS QUERIDOS AMIGOS Y PARIENTOS SEXAGENARIOS Y Masculinos (SIN “RAROS ORGULLOS”):
Hoy se recido this electrónico y Como. Por suerte Conservo en Funciones mis Órganos vitales-entre Ellos mi “disco duro” – Tengo el gusto de reenviarlo a mis amigos sexagenarios párrafo arriba, con el Objeto de Que puedan evaluar Que Funciones estan disminuidas y Cuales no . –
Un gran abrazo de Este octogenario que »Eppur si muove“:
daniel Balbastro
Puede Ser REAL, PERO MUY CRUEL …

Si USTED Ya Llego a los 60 Jahr o no está porción Llegar, cuidese. Le Han contado el cuento de Que Usted está en Do Mejor EDAD? ESO FUE a los 30 ya COMIENZOS de los 40, Cuando repetir de tareas pendientes no solas ningún HACIA DAÑO, Sino Que era Motivo de orgullo y de jactancia. Pero a los 60 “repetir” es Palabra prohibida.

¿Repetir matrimonio? ¿Con Qué, ya QUÉ hora?
¿Repetir el acto sexual? … Dentro De Una Semana con suerte. 
Despues de los 60, no heno Volver a Empezar … ¿Con QUÉ TIEMPO?
¿Volver a Ser papá? Y las desveladas y agachadas!
¿De fiesta Hasta Que amanezca?Muerte súbita.
¿Volver a trotar? Infarto Seguro.
¿Volver a nadar? Sera flotar.
¿Beber Como. los antes? peligro de cirrosis …
despues de los 60 es del todo graves, de cama, de muerte. . Un catarro es Una bronquitis
Un resfrío, es CASI Una neumonía.
Un barrito …:. cáncer
. Un golpe, Es Un hematoma
. Un maní, es diente perdido
A partir de los 60: Un dolor de cabeza? Es Un derrame.
¿Un dolor en el pie?, es gota.
¿Dolores en Las Manos?, es artritis.
¿Un olvido?, demencia senil.
¿tiritar?, es Parkinson.
¿tos? … tuberculosis.
¿Una oclusión intestinal?, cáncer de colon.
¿Sed?, diabetes.
¿Un Kilo de Mas?, retención de Líquidos.
¿Un kilo de Menos?, ¿Sera leucemia?
¿Una meada a media noche?, chaque con el Cáncer de Próstata .
A los 60, Lo Que Crece sí no cae:
el pelo en la cabeza, Pero Crece en la barbilla, en las orejas, en la nariz.
Los Brazos sí Vuelven gelatina.
A los 60 Todo es Peligroso: 
¿SonArte Fuerte?, Hemorragia nasal. 
¿Visión borrosa?, Cataratas.
¿Cera en los Oídos?, otitis.
¿Insomnio?, Depresión.
Si despierta y no Siente nada, es PORQUE ESTÁS muerto .
Ahora los dejo, PORQUE es hora de echarme sin polvito, de talco Para Los pasteles. 
Ésto va con letra grande Para Qué no les cueste mirada de soslayo
 No Nos Hagamos ilusiones. Si amanecemos Respirando el resto es ganancia.DISFRUTEMOS y A BAILAR, LO QUE NOS TOQUE ..! En las malas, cuenten conmigo, porqué en Las Buenas les sobrarán amigos …