News Center

Offer to the bondholders and Paris Club advances
Ambito Financiero
January 06, 2010

by Guillermo Laborda

The recovery of the markets around the world is blessing the offer to the bondholders. The Discount bond (the paper that will be delivered in swap for the old ones in default) gained 14% in a month. Relations between the Central Bank and the Economy Ministry are not so bad, due to that the entity led by Martin Redrado was buying "Discos" (the name given this bond in trader jargon) to collaborate in the offer's appreciation. It was not an isolated move, but one agreed to by the parties. Anyway, it was the recovery of the global markets that mostly came together to improve the Argentine offer.

It came out yesterday that the Securities and Exchange Commission has not until now raised objections to the documents presented by the government. In 15 days, it will give the green light to the process. In parallel, at the Finance Secretariat they are working on the final prospectus text that will be presented once the SEC gives its approval. The final authorization will be almost automatic. From then on, in the last week of January and the first of February, various financial delegations will be sent out to hit the main financial centers (New York, London, Rome, Frankfurt, Tokyo) to seduce the holders of bonds in default. From the Economy Ministry, they factor in that the offer will have political and judicial backing in the United States. Recently, there were the decisions by Thomas Griesa, the judge presiding over the lawsuits against Argentina over the default in New York. In the first place, protecting the funds of ANSeS and then denying two vulture funds to know the mechanism for the debt swap in motion. An unexpected friend was Griesa to the Economy Ministry.

But Amado Boudou has it set for the end of the month to announce the designation of the bank that will advise the government in the negotiations with the Paris club. In reality, he will go frther and will include the announcement of the beginning of moves towards the creditor countries by the winning company (most likely to be Lazard Freres). As this newspaper has reported, it will avoid turning to the IMF for an audit using the reports that must be presented to the G-20. As the payment to the Paris Club will be made in installments (in place of the haircut on the debt it is proposed they pay 100%, but at a longer term of 6 years), some organization has to back the operation and here is where the G-20 miraculously appeared. The Foreign Ministry is already presenting formal documentation and the Economy Ministry is reserving the executive participation at that forum of countries.

But not all of them are proposals of friendship for Amado Boudou. In silence, there are lawsuits advancing against Argentina in the ICSID, the tribunal of the World Bank for protection of investments. Recently, it had to agree to payment to Azurix (another provider of potable water in Buenos Aires) with bonds through a decision against it. And there are various cases on the list to continue in the hands of the Treasury Counsel, Osvaldo Guglielmino.

A worry persists in the local market: Martin Redrado's situation after the DNU that permitted the use of reserves for debt payment. Tomorrow there will be a meeting of the board of directors of the BCRA, as on every Thursday. And the issue of the DNU is not on the agenda. In reality, the leadership of the BCRA doesn't have to rule on that operation. But, against all that is suspected, it's at the Ministry of Economy and not at the BCRA where the next step must occur. Officials are working on the rulemaking for the DNU, which could take at least two more weeks. Then they will seek to use the reserves to launch payment auctions on bonds. Remaining to be seen is the possibility of embargoes by the vulture funds on those payments. It also came out that the lawyers for the Argentine Republic have been saying that, while taking corresponding collections, there wouldn't be a possibility for embargoes. It will depend on what their "friend" Griesa decides.

U.S. Government
Takes Action

Click here to view letters by the Administration and Members of Congress on Argentina's debt and economic policies.

The Debt and Europe

Click Here To Read More

ATFA Member Spotlight

National Taxpayer's Union

Open Letter to the U.S. House of Representatives: Protect Taxpayers from Judgment-Evading Nations

Click here to view other ATFA member activity

Join Us
Show your support for ATFA and our work regarding debt default by joining our growing list of supporters.

Tell Your Friends
Do you have friends or colleagues who would be interested in supporting ATFA? Send them an invitation to this site by clicking here.