By Taos Turner
Aug. 10, 2015
Opposition parties could still rally together to win Argentina’s presidency later this year
BUENOS AIRES—A governor loyal to Argentine President Cristina Kirchner emerged from a primary election on Sunday as the leading candidate to replace her when she steps down in December, but opposition parties could still rally together to win Argentina’s presidency later this year.
Former speedboat racing champion Daniel Scioli won almost 39% of the primary vote, in which voters nominated candidates to compete in a general election in October. Mr. Scioli’s about eight-point lead over an opposition coalition led by Buenos Aires Mayor Mauricio Macri puts him within reach of winning.
Argentine law requires a candidate to get at least 45% of the vote or 40% plus a 10-point lead over his closest rival to avoid a second-round election.
At stake is the legacy of Mrs. Kirchner and her populist policies. She and her late husband and predecessor, Néstor Kirchner, came to power in 2003 and won widespread appeal after resolving a crushing financial crisis and investing heavily in social programs. But over the years, their policies fueled inflation and, more recently, economic stagnation and rising poverty, disaffecting more voters.
But while Mr. Scioli, of the ruling Victory Front party, outpolled rival individual candidates, nearly 60% of voters favored opposition candidates. If enough of those voters back Mr. Macri in October he could win.
“The ruling party may have reached its ceiling in terms of potential votes, while the opposition has perhaps the most to grow,” said Dante Sica, who runs Abeceb, an economic consulting firm.
Both Mr. Scioli, the governor of Buenos Aires province, and Mr. Macri will need to woo supporters of Congressman Sergio Massa, who came in third place.
“Massa took away votes from Macri but also from Scioli,” Mr. Sica said. “The primary results show that we’re probably headed for a second-round election and that this could be very close.”
Mr. Scioli has praised the president’s policies and pledged continuity. In contrast, Mr. Macri promises a more abrupt shift toward more market friendly policies that he claims would boost investment and economic growth.
By Jonathan Gilbert
August 10, 2015
BUENOS AIRES — The future of Argentine politics was fuzzy on Monday after an all-party presidential primary, billed as a measure of the nation’s desire for change, proved close enough to cast doubt on who would prevail in general elections.
Daniel Scioli, the nominee of the governing party, took more than 38 percent of the vote, besting the alliance of his main rival, Mauricio Macri. But the eight-point margin of victory was not sufficient to gauge confidently how voters will approach the general election on Oct. 25.
”All possibilities are open,” said Mariel Fornoni, a political analyst who runs Management and Fit, a local polling company. “Everybody is celebrating, but at the same time they’re all worried.”
Continue reading the main story
Mr. Scioli, 58, ran unchallenged for the nomination of the governing party after being endorsed by President Cristina Fernández de Kirchner, who cannot run for a third consecutive term. Mr. Macri, 56, the mayor of Buenos Aires, easily overcame challengers within his Cambiemos, or “Let’s Change,” alliance.
Argentina switched to an open primary system in 2011. Unlike the United States, primary elections in Argentina are mandatory for all voters, not just those from a specific party. The candidate from each party or alliance that gets the most votes will run in October’s general election.
To win outright in October without a runoff, a candidate will need more than 45 percent of the vote, or 40 percent with a lead of more than 10 points. But with 98 percent of the votes counted on Monday, the primary results were seen as inconclusive, complicated by uncertainty over how many votes might drift away from a third political bloc, led by Sergio Massa, which got 21 percent of Sunday’s tally.
”We have to wait awhile to see how things reconfigure,” Ms. Fornoni said.
Mr. Scioli, a former powerboat racer who is governor of Buenos Aires Province, could win without a runoff if he attracts voters beyond the base of his party, the governing Front for Victory. To do that, he would have to modulate the tenor of his campaign, which is directed at hard-line supporters of Mrs. Kirchner, analysts said.
Mr. Scioli is “in a very good position and remains favored to win,” Daniel Kerner, a Latin America analyst at the Eurasia Group, a political risk consultancy firm, wrote in a note to clients, adding that he “still has room to grow.”
A sticking point for Mr. Scioli may be Buenos Aires Province, home to more than a third of voters. His party’s nominee for governor there, Aníbal Fernández, is Mrs. Kirchner’s cabinet chief and has been tainted by accusations of links to drug trafficking. Though Mr. Fernández denies malfeasance, the issue and his closeness to Mrs. Kirchner are barriers to attracting swing voters, said Carlos Germano, an Argentine political analyst.
That increases the probability of a runoff in which Mr. Macri, whose candidate for governor performed well Sunday in a parallel primary, could unite the opposition and overcome Mr. Scioli.
Both Mr. Scioli and Mr. Macri placed a triumphant spin on the primary results.
“Today we have to celebrate, because an alternative has been consolidated,” Mr. Macri told his supporters late Sunday night.
Mr. Scioli, meanwhile, pointed in an impassioned speech to the eight-point lead. “They can look at it however they want to look at it, but the only truth is the reality,” he said.
Many people here support the Front for Victory because they believe Argentina is far better off today than when the party came to power in 2003, in the wake of a severe crisis that had plunged millions into poverty.
”The truth is that the country is fine; look at where we were 15 years ago,” said Alexia Charchabukian, 33, a jewelry seller who said she voted for Mr. Scioli at a school in Chacarita, a gritty neighborhood here. She cited Argentina’s rising middle class and Mrs. Kirchner’s focus on closing the inequality gap.
“They try to brainwash us, telling us that everything is bad, but we’re O.K.,” Ms. Charchabukian added, referring to influential news media organizations that have clashed with Mrs. Kirchner, who has compared their newsprint to “ink bullets.”
Mr. Macri, a former businessman and soccer club president, has gained support among voters who have voiced discontent with what they see as Mrs. Kirchner’s imperious style and other concerns, including accusations of corruption, high inflation and perceptions that violent crime is on the rise.
”The country is not doing well,” said Patricia Caneva, 56, a private English tutor who said she voted for Alejandro Bodart, a socialist. She said Mrs. Kirchner’s “first term was good, but the second has been a struggle,” with a rising inflation rate and slowed economic growth. But hinting at Mr. Macri’s struggle to shake off a corporate image, she said: “He will only govern for the upper-middle class. I don’t like him.”
Mr. Macri has said that if he is elected he will maintain some of Mrs. Kirchner’s cornerstone policies, including the nationalization of an oil company and an airline. His aides said he would also strengthen public institutions, including Argentina’s politicized judiciary and the national statistics institute, whose data has in the past been criticized by the International Monetary Fund.
By Peter Prengaman
August 10, 2015
BUENOS AIRES, Argentina — President Cristina Fernandez’s chosen successor easily won Argentina’s open primaries, but the results Monday underscored that October’s election is still up for grabs and voters remain deeply divided about who could best tackle the country’s myriad economic problems.
With 98 percent of ballots counted, Daniel Scioli was leading with 38 percent of the vote. Mauricio Macri and two others in his “Let’s Change” coalition topped opposition candidates with a total of 30 percent while Sergio Massa and one other aspirant on his “United for a new Alternative” ticket garnered 20 percent.
All candidates competed on the same ballot, with the top finishers from each party qualifying for the Oct. 25 general election. That meant Sunday’s primaries were essentially a giant national poll.
“No matter how you look at it, the only truth is the reality,” Scioli told supporters early Monday, paraphrasing famous words by former President Juan Domingo Peron, founder of the ruling political movement. “And the reality is that we have a big margin over our adversaries.”
Scioli’s margin would not be enough to win election in the first round, which would require either 45 percent of the vote or 40 percent and a 10-point margin over the runner-up. A November runoff would likely benefit Macri, who might pick up the votes from Argentines who initially supported other opposition candidates.
The South American nation is struggling with inflation that independent analysts put at over 30 percent and the Argentine peso has slid sharply against the American dollar. A longstanding dispute with U.S. hedge funds has kept foreign investors away.
“When are we going to finally become a serious country?” said Adrian Williams, a 51-year-old camera technician who voted for Macri. “Just look at the inflation. It’s crazy.”
Fernandez endorsed Scioli, the governor of the Buenos Aires province and a former vice president, but while he has praised her policies, he also promised to make reforms where necessary and be more amicable in dealings with other countries.
Macri, the former mayor of Buenos Aires and ex-president of the popular Boca Junior soccer club, has promised to attract foreign investment by making the country more business friendly and lifting restrictions on citizens’ ability to buy U.S. dollars, though the government and some economists say that isn’t realistic.
Two weeks ago, Macri did an about-face by saying he now supported Fernandez’s state takeovers of the Aerolineas Argentinas airline and the YPF oil company. The move was widely interpreted as an acknowledgement that Macri couldn’t run as an anti-Fernandez candidate when a large part of the electorate continues to support her.
Massa, who held cabinet and elective posts before breaking with Fernandez, has tried to distinguish himself by promising to jail corrupt politicians. His showing put him in a strong position to be a kingmaker or spoiler candidate.
In an interview with the Mitre radio station, Massa argued he still had a shot at the presidency but also hinted at negotiations down the line. “It’s time for dialogue” on a unified program for opposition leaders, he said.
Scioli was buoyed by Fernandez’s endorsement, but her blessing could be a pyrrhic victory since the polarizing leader has both a rabid following and many vociferous critics.
Fernandez is constitutionally barred from running for a third term. Her late husband and predecessor, Nestor Kirchner, was elected in 2003 and served one term before she ran. The couple is widely credited with lifting Argentina after one of its worst moments, a $100 billion default in late 2001 that forced a run on the banks and wiped out the savings of many citizens.
But detractors say Fernandez’s social policies have contributed to heavy inflation and criticize her combative rhetoric.
“The president talks and talks, but all she has done is leave us bankrupt,” said Jorge Fernandez, 75, a flower salesman who said he was so disgusted with the political climate that he didn’t vote.
Candidates were also vying for several governor and congressional races. Only candidates with at least 1.5 percent of the vote in their respective races can continue to the general elections, effectively eliminating many small-party candidates.
August 10, 2015
BUENOS AIRES, Argentina — A U.S. appeals court has ruled that a New York judge went too far in a recent decision favoring a second group of holdout investors in a longstanding debt dispute with Argentina.
The 2nd U.S. Circuit Court of Appeals said Monday that U.S. District Judge Thomas Griesa should not have ruled in June that Argentina needed to pay $5.4 billion to the so-called me-too debt holders before paying its majority creditors.
The court ordered Griesa to limit his scope to the group of hedge funds that initially sued Argentina after refusing to accept bond swaps.
The dispute has its roots in Argentina’s $100 billion default in 2001. Griesa has repeatedly ruled that Argentina can’t make payments on its debt without paying $1.3 billion to the holdout funds.
By Benedict Mander in Buenos Aires
August 10, 2015
Daniel Scioli has emerged as the frontrunner in Argentina’s presidential election, raising the chances that the 12-year rule by Cristina Fernández’s governing Peronist party will be extended.
The governor of Buenos Aires province won 38.5 per cent of the vote in Sunday’s presidential primary, with 97 per cent of the ballots counted, compared with 30 per cent for the centre-right alliance of Mauricio Macri, mayor of the city of Buenos Aires.
But it remained unclear whether Mr Scioli would be able to avoid an unpredictable run-off vote against Mr Macri to succeed Ms Fernández, who has reached her two-term limit. Argentina’s unique system requires all voters to decide which candidate from each major party or coalition will run in the election, set for October 25. As such, it is considered a dry run for the presidential vote.
“Whatever the outcome, we think the bigger picture is that markets are still being overly optimistic on the prospects for major reform under either candidate,” says Edward Glossop, an economist at Capital Economics.
Even so, Mr Glossop argues that “some form of economic adjustment post election will be inevitable”, with Argentina’s economy buckling under capital controls, high inflation and a bulging fiscal deficit. Whoever wins the vote on October 25 is also expected to try to put an end to a decade-long legal battle with US hedge funds that has blocked Argentina’s access to international capital markets.
The centrist coalition led by Sergio Massa, a dissident from the Peronist party, came third in Sunday’s primary with 20.6 per cent. To win outright in the first round, a candidate needs either 45 per cent of the vote, or 40 per cent with a 10 point margin over the runner-up.
Rosendo Fraga, a political analyst, says that although Mr Scioli now has “a clear advantage”, he is not guaranteed a win in the first round.
Some analysts also believe Mr Macri’s chances would rise in the run-off once Mr Massa’s voters were thrown into the mix — although pollsters have published contradictory results on who would benefit more between the two likely men.
Financial markets would welcome the prospect of a second round, because the business-friendly Mr Macri, who has promised wholesale changes, would stay in the race.
His priorities include axing currency and trade controls and reaching a settlement with Argentina’s “holdout” creditors to reactivate much-needed foreign investment.
While the opposition claimed victory on the grounds that the majority of the electorate had voted against the ruling party and therefore wanted change, Mr Scioli insisted he had won the most votes.
Analysts highlighted that, in the past, candidates with the largest share of the votes in the primaries had tended to extend their lead in the final election.
“Argentina has found a way. It is evident that with this result there is a clear will to continue advancing towards a great future,” Mr Scioli told supporters, praising both Ms Fernández and her late husband, former president Néstor Kirchner, for whom he was vice-president.
Nevertheless Mr Scioli, who chose one of Ms Fernández’s closest advisers as his running mate, added that he would “change what needs changing”.
The biggest challenge for Mr Scioli is likely to be in his home province of Buenos Aires, which contains over a third of the electorate and where Mr Macri’s candidate for governor, Maria Eugenia Vidal, performed surprisingly well.
Meanwhile, the candidate for Mr Scioli’s party in that province, Aníbal Fernández, has been bogged down by accusations of masterminding the killing of three men allegedly connected to a drug-trafficking ring.
“Scioli will launch a huge effort to increase his share of votes, especially those from [Mr Massa’s coalition], which means he will moderate his stance. Macri, meanwhile, will look to polarise the election,” says Daniel Kerner, an analyst at Eurasia Group. He said a victory for Mr Scioli in the first round was “not easy, but far from impossible, especially if turnout is higher”.
Argentina also faces elections for both Congress and governorships in October. With Mr Scioli likely to obtain the largest share of the vote, his party is on track to have the largest representation in Congress and the control of most states.
This should ensure that even if Mr Macri wins, his room for manoeuvre would be constrained.
By Andre Radzischewski
August 10, 2015
Kirchner looks to ally to preserve populist legacy
Buenos Aires | The populist legacy of incumbent President Cristina Fernandez and her late husband and predecessor, Nestor Kirchner, is now in the hands of longtime ally Daniel Scioli, who claimed victory in Sunday’s closely watched primary vote but still faces a tricky challenge in October’s presidential vote.
Mrs. Fernandez will not be on the ballot, but her left-leaning agenda almost certainly will be. It’s an agenda that the country has pursued for more than a dozen often drama-packed years since Mr. Kirchner was first elected to the Casa Rosada, Argentina’s presidential mansion, back in 2003.
The vote will also be the first national test since the stunning scandal from the mysterious suicide of a top Argentine prosecutor in January rocked the Fernandez administration, but one that the president appears to have weathered.
Argentina’s next president will likely be picked in a runoff between Mr. Scioli — Mr. Kirchner’s vice president, the current governor of Buenos Aires province and Mrs. Fernandez’s handpicked successor — and Mauricio Macri, the center-right mayor of Buenos Aires, according to results from this weekend’s national primaries, in which Argentines were called to simultaneously voice their party preferences and choose presidential nominees.
Some 38 percent of the electorate backed Mr. Scioli, the sole candidate of the Peronist Front for Victory when Mrs. Fernandez had forced out numerous challengers and installed her chief ideologue, Carlos Zannini, as Mr. Scioli’s running mate.
Mr. Macri, meanwhile, came in second at 24 percent, though he clearly won nomination of the opposition Cambiemos coalition, which logged a combined total of 30 percent between Mr. Macri and his two internal challengers.
The final tallies from Sunday’s primary vote were being watched closely because of Argentina’s peculiar electoral law, which stipulates that the winner of the presidential vote’s first round on Oct. 25 only needs to score 45 percent — or 40 percent if he beats his closest opponent by at least 10 percentage points.
Otherwise, a runoff between the top two vote-getters will be held on Nov. 22 — a scenario that now seems exceedingly likely. “There is no doubt” that there will be a second round, said Diego Ferreyra, a political scientist at the Catholic University of Argentina.
Mrs. Kirchner and her allies face some real political hurdles, even though most political analysts say the sensational death of prosecutor Alberto Nisman, who had been investigating high-level corruption, appears to have played little role in Sunday’s result. The economy is battling inflation rates estimated at over 30 percent, and a bitter debt dispute with U.S. creditors has helped undercut confidence in the Argentine peso.
Supporters of Mr. Scioli’s had come out early and loudly on Sunday night to celebrate a victory that, in the end, turned out to be less “convincing” than they insisted. Addressing them after midnight, the 58-year-old — a former powerboat racer and uncharismatic public speaker — limited his comments to a pledge of allegiance to the populist “model” of “our beloved president.”
Even more uncomfortable on flag-draped stage appeared Mr. Zannini, 60, who had long served Mrs. Fernandez as a Karl Rove-like “architect” behind the scenes. The Kirchner clan wants the presumed vice president — who has few constitutional powers — to function as “a kind of inspector” in a Scioli Cabinet, Mr. Ferreyra said.
A pragmatist, Mr. Scioli over the past four years managed to largely appease Mrs. Fernandez while keeping his ultra-Kirchnerist vice governor, Gabriel Mariotto, in check. But “Zannini is not Mariotto; he is a much more politically savvy person,” Mr. Ferreyra warned.
At the Cambiemos rally, meanwhile, Mr. Macri exuded his trademark optimism while countering critics who had said he flip-flopped last month by saying that he would maintain the government’s ownership of flag carrier Aerolineas Argentinas and oil giant YPF, both nationalized under Mrs. Fernandez.
“I want to tell all Argentines that I am absolutely clear on what my values and convictions are,” the 56-year-old said, adding that he appreciated both free market liberals’ defense of individual liberties and socialists’ insistence on equality.
The engineer and former head of the Boca Juniors soccer club then made an impassioned call for unity among the opposition — the lack of which was underlined on Sunday by the 21 percent who backed the UNA coalition of Peronist dissidents.
UNA leader Sergio Massa, a former Fernandez Cabinet chief-turned-opposition leader, has few chances of making it past the first round of voting. But who his supporters turn to in an eventual runoff will likely determine the next president.
How Massa backers might split, though, is one of the major unknowns of the election, said political analyst Joaquin Morales Sola, because they dislike Mr. Scioli’s ties to the Kirchners but — as Peronists — also have little sympathy for Mr. Macri, a traditional foe.
“Sixty percent of society are anti-Kirchnerist,” Mr. Morales Sola said. “But that does not mean that 60 percent are anti-Peronist.”
By Shannon K. O’Neil
August 10, 2015
In yesterday’s presidential primaries Daniel Scioli unsurprisingly won the Peronist Frente para la Victoria (FPV) party primary, backed by Cristina Kirchner, with 38 percent of the total vote. The Cambiemos coalition, dominated by the PRO party, nominated current Buenos Aires mayor Mauricio Macri (30 percent). And Sergio Massa became the candidate for the UNA coalition, comprised of dissident Peronists (21 percent). On September 20, the three will begin their official campaigns for the October 25 presidential election (with a potential runoff on November 22). The results reflect a long holding Argentine maxim: when united the Peronists are impossible to beat.
This reality is the main reason why Scioli, who has never had an easy relationship with Kirchner, acquiesced to her close ally Carlos Zannini as his running mate. In return, she forced challenger Florencio Randazzo to bow out of the primary race.
Through this electoral alliance Kirchner hopes to maintain her influence and power. Yet history shows how difficult this will be—her predecessors all failed. Upon entering the Casa Rosada, Scioli will inherit a vast patronage network of millions of jobs and benefits built up during the Kirchner years and benefit himself from strong public support for these programs.
“The Scion and the Heir,” The Economist, August 1, 2015.
And once out of office Kirchner’s political immunity ends. Numerous potential lawsuits await. In Nevada, a judge has ordered a deeper investigation into Mossack Fonseca, a Panamanian law firm accused of helping Kirchner’s friend Lázaro Báez embezzle and launder Argentine public funds. In Buenos Aires, Hotesur, a hotel management firm owned by Kirchner and her family, is under investigation for billing irregularities (also involving Báez). Zannini won’t be able to do much to help her as the vice presidency in Argentina, while symbolically important, is not institutionally powerful.
Scioli may find it useful to keep Kirchner close for a time, calling on her to rally diehard loyalists for changes he wants to make. But he will have the power to dismiss her when her usefulness ends, leaving her to join Carlos Menem and Eduardo Duhalde as former Peronist presidents turned political outcasts. An unemotional politician, whatever Scioli decides will be very strategic.
BUENOS AIRES (Reuters) – Argentina’s presidential election is likely to be battled out in a tight run-off vote after Sunday’s party primaries indicated ruling party candidate Daniel Scioli would struggle to win outright in the first round.
The prospect of a head-to-head between Scioli and his more business-friendly rival, Mauricio Macri, sent Argentine bond prices higher, with defaulted U.S. dollar discount bonds hitting a two-month high.
Macri has promised to unravel swiftly outgoing President Cristina Fernandez’s controls on the economy to free up the market, while Scioli has pledged gradual change and vowed not to destroy Argentina’s strong social safety net.
With 94 percent of votes counted, official results showed Scioli and the ruling Front for Victory winning 38.40 percent while Macri’s Let’s Change alliance secured 30.10 percent of votes.
“With these results a ballotage looks most probable,” said political analyst Fausto Spotorno.
Argentina’s primaries provide an accurate account of public opinion ahead of the first round of the election on Oct. 25, with voters able to nominate a candidate across party lines.
As the final results trickled in, Argentina’s defaulted 2033 U.S. dollar Discount bonds rose as much as 1.47 percent to a two-month high of 100.917 before easing off, Thomson Reuters data showed.
U.S dollar-denominated Par bonds due in 2038 climbed to a two-week high of 58.800 before falling back to trade at 58.650 at 9:53 a.m. ET, 0.2 percent up from Friday’s close.
“Bond prices will continue to rise as the market views positively the likely ballotage between Scioli and Mauricio Macri,” said Jorge Piedrahita, chief executive of brokerage firm Torino Capital.
In a speech late Sunday, Macri said he was “happy” with the outcome of the primary.
“An alternative path toward change in Argentina is consolidating,” Macri told supporters.
Opinion polls for a second round run-off are inconclusive, with different pollsters showing Scioli and Macri winning what would likely be a close contest. How the votes of third-placed candidate, dissident Peronist Sergio Massa, are split will be key.
Fernandez’s interventionist policies have fueled one of the world’s highest inflation rates, stunted investment into Latin America’s No.3 economy and stalled economic growth.
“The bigger picture is that some form of economic adjustment post-election will be inevitable,” Edward Glossop, an economist at Capital Economics, said in an investor briefing note.
To win outright on Oct. 25, a candidate needs 45 percent of the vote, or 40 percent with a 10-point margin over whomever places second.
(Reporting by Richard Lough and Sarah Marsh; Editing by Bernadette Baum)
By Bob Van Voris
August 10, 2015
The judge overseeing lawsuits arising from Argentina’s 2001 default received a sharply worded reversal of a ruling that favored bondholders, in a rare courtroom win for the South American nation.
The U.S. Court of Appeals in New York Monday set aside U.S. District Judge Thomas Griesa’s ruling that let investors holding eight classes of the bonds sue the nation as a group to try to win repayment. The bondholders may have to sue individually to pursue their case, which is usually more costly.
In its ruling Monday, the appeals court said Griesa had failed to follow an earlier decision giving him clear directions on how to proceed in the case.
The ruling is a rare win by Argentina in U.S. federal courts. Last year the appeals court upheld a ruling by Griesa blocking Argentina from making payments to holders of its restructured debt before paying $1.7 billion to a group led by Paul Singer’s NML Capital.
Griesa was given “specific instructions that did not permit expanding the plaintiff classes,” the court said.
Argentina defaulted on a record $95 billion of sovereign debt in 2001 and has spent the past 14 years fighting attempts by various parties to recover what they’re owed. The nation had earlier asked the appellate panel to limit investors who could join the class action.
The appeals case is Puricelli v. Republic of Argentina, 14-2104, U.S. Circuit Court of Appeals for the Second Circuit (Manhattan).
By Nate Raymond and Joseph Ax
August 10, 2015
Aug 10 (Reuters) – Argentina on Monday won the reversal of a U.S. judge’s ruling that a group of bondholders suing over its defaulted debt said entitled them to $700 million.
The 2nd U.S. Circuit Court of Appeals in New York ruled that U.S. District Judge Thomas Griesa had improperly expanded a class of bondholders who were seeking repayment following the country’s $100 billion default in 2002.
Circuit Judge Chester Straub, writing for a three-judge panel, said Griesa must return to a narrower definition of the class, limited to those who have continuously held the eight series of bonds in question, and to hold a hearing to determine the proper amount of damages.
Carmine Boccuzzi, Argentina’s lawyer, welcomed the ruling, saying the plaintiffs had “repeatedly failed to prove their alleged damages and are not entitled to the overstated judgments” they have sought in court.
Jennifer Scullion, the plaintiffs’ lawyer, declined comment.
The ruling marked the latest development in long-running litigation by creditors seeking full repayment on Argentine bonds following its 2002 default.
The country defaulted again in July 2014 after refusing to honor court orders to pay $1.33 billion plus interest to hedge funds including Elliott Management’s NML Capital Ltd suing for full payment on its defaulted bonds.
Griesa later in June ordered Argentina to pay $5.4 billion to another 500-plus holders of defaulted debt before it could pay the majority of its creditors.
The ruling on Monday came in a related series of lawsuits by creditors seeking to pursue damages as a group in class action lawsuits rather than individually.
The creditors initially sought to pursue claims on behalf of all holders of Argentina’s bonds in eight bond series.
Griesa granted class action status in 2005 but only on behalf of creditors who continuously held the bonds, a major restriction given secondary market trading in the bonds. He then entered judgment against Argentina for $2.2 billion.
Argentina appealed. In 2010, the 2nd Circuit reversed, saying the judgments were inflated.
Griesa entered judgment again, this time for $700 million, but the 2nd Circuit reversed once more and instructed him to hold a damages hearing and to assess them on an individualized basis if a reasonable approximation as a group was not feasible.
Instead, Griesa in 2014 modified the class definition to encompass all holders of outstanding bonds, as the plaintiffs originally wanted.
The creditors subsequently moved for an order blocking Argentina from servicing its debt unless the country paid them $700 million. (Reporting by Joseph Ax; Editing by Meredith Mazzilli and Andrew Hay)
By Charles Newbery
10 Aug 2015
Argentina’s state-owned Enarsa has called off a proposed tender for the delivery of two cargoes of liquefied natural gas in September on expectations that the additional supplies will not be needed, a source close to the situation said Monday.
“The announcement was made [for the tender], but then it was canceled because the boats were not needed,” the source said.
The tender would have seen two cargoes delivered to a floating regasification terminal in Escobar, up river from Buenos Aires.
The bidding round attracted the interest of Brazil’s Petrobras, Spain’s Gas Natural Fenosa plus trading firms Trafigura and Glencore, El Inversor Online news service reported August 6, without sourcing the information.
Enarsa, which oversees national gas imports, could not be reached for comment Monday. The company has an unwritten policy of not speaking openly with the press.
A source at YPF, which handles the tenders and deliveries, declined to comment on the report and the tender cancellation, citing company policy.
Argentina has seen demand for gas decline this year, in part due to warmer-than-normal temperatures so far in the May to September cold season. Fundelec, a power industry group, calculates that temperatures averaged 13.5 Celsius (56.3 Fahrenheit) in June, nearly two degrees higher than the 11.6 C historical average.
As a result, gas demand fell 5.8% to an average of 120.2 million cu m/d in June from 127.6 million cu m/d in the year-ago period, according to the national statistics agency Indec.
Enarsa lined up most of its LNG deliveries for 2015 in an October 2013 tender, when 98 cargoes were ordered. However, it periodically enters the spot market to meet unexpected demand, particularly during the cold season.
Argentina has been importing increasing amounts of gas since 2004 as declining output from its fields has led to shortages. Gas production dropped 20% to an average of 114 million cu m/d in 2014 from a record 143 million cu m/d in 2004, but it has started to recover. Production reached 118 million cu m/d in May, helped by rising output from shale and tight plays.
The output, however, is still shy of the country’s 130 million cu m/d average demand this year and peaks of 180 million cu m/d, according to the Argentine Institute of Oil and Gas (IAPG), an industry group.
Argentina’s gas imports totaled 43.6 million cu m/d in June, up 2.3% compared with 42.6 million cu m/d in June 2014, according to the latest Energy Secretariat data. Of the imports, 16.5 million cu m/d was by pipeline from Bolivia and the rest LNG. The LNG imports totaled the equivalent of 27.1 million cu m/d in sendout capacity in June, up 8% compared with 25.1 million cu m/d in the year-ago period, the data shows.
By Adam Klasfeld
August 10, 2015
MANHATTAN (CN) – Argentine bondholders experienced a setback in their fight for compensation over the country’s 2001 debt default, as the Second Circuit reduced the republic’s liabilities on Monday.
The unanimous ruling slaps presiding U.S. District Judge Thomas Griesa on the wrist for ignoring the appellate court’s previous instructions, twice.
Griesa, an 84-year-old jurist, has frequently been at odds with Argentina over cases stemming from the country’s default on up to $100 million in debt 14 years ago.
This rocky relationship hit a nadir in a case filed by New York-based companies NML Capital and Aurelius Capital Management, which have been denounced by their as critics “vulture funds” for gobbling up the distressed debt of poor countries for pennies on the dollar, and then suing for the full amount.
U.S. courts, however, have routinely ruled in favor of the hedge funds.
Griesa, in particular, has denounced Argentina as “lawless” for refusing to pay up. After he ruled in favor of the New York-based firms, he was lampooned on the streets of Buenos Aires in posters that showed his head superimposed on the body of a vulture.
Well before that case made headlines, eight class action lawsuits filed by individual bondholders against Argentina wound their way through the dockets of the same courthouse, before the same judge, over the same debt, to much less fanfare.
Argentina does not dispute owing money to the bondholders in these cases; the controversy has always been over how much the country owes, and how those figures are determined.
Unlike in the hedge funds case, Argentina has successfully challenged Griesa’s rulings favoring the bondholders on appeal.
U.S. Circuit Judge Chester Straub recounted this history in the sharply worded opening paragraph of his ruling.
“After previous panels of this court twice vacated aggregate judgments entered by the district court in favor of plaintiff classes, we remanded with specific instructions,” he wrote. “Rather than follow our instructions, the district court certified expanded plaintiff classes.”
When a prior panel heard the case, the Second Circuit ordered Griesa to hold an evidentiary hearing to calculate damages though an “individual approach” if an “aggregate approach” were not possible, according to the opinion.
After bondholders complained about the “legal and logistical pitfalls” of such a hearing, Griesa expanded the definitions of the class certification as an alternative.
Straub said that this contradicted the court’s “clear” directive.
Attorney Carmine Boccuzzi, who represents Argentina for the Manhattan-based firm Cleary Gottlieb Stein & Hamilton LLP, said his client is “pleased” with the ruling.
“Plaintiffs have repeatedly failed to prove their alleged damages and are not entitled to the overstated judgments they have twice before demanded and that the Second Circuit has clearly said are improper,” he added.
An attorney for the bondholders declined to comment on the ruling.