As holdouts meet with court mediator in NYC, ATFA directors arrive in Argentina.
As the holdouts met with court-appointed mediator Daniel Pollack in New York yesterday, the government fired back with paid advertisements aiming to dispel what a lobby group for the “vulture” creditors has characterized as myths in the decade-long battle with bondholders who have refused to restructure defaulted debt.
On the same day that Minister Axel Kicillof published a letter in The Financial Times countering a previous piece from NML Capital’s Jay Newman, the Economy Ministry turned the tables on the American Task Force Argentina (ATFA), a lobby group for the “vulture” funds.
In its advertisement, the Argentine government says that the “facts demonstrate it’s not a myth that they are vultures.”
Boldly phrased, the ad outlines three “lies” purported by the funds, countering that Argentina wants to negotiate fairly, that Griesa’s ruling has wider repercussions than only the US$1.33 billion plus interest owed in the case and questioning the creditors’ disposition to “giving Argentina more time.”
Kicillof’s Financial Times letter was answered by ATFA with another ad titled: “Is this the rhetoric of a man who wants to negotiate?”
Hundreds of thousands of dollars, perhaps over US$1 million combined from both sides, has been spent on ads in the The New York Times, The Wall Street Journal, The Financial Times and The Washington Post in the last three weeks.
Argentina’s Economy Minister Axel Kicillof has made speeches at the United Nations and in Washington, repeatedly calling the holdout creditors “vultures” and saying that US District Judge Thomas Griesa’s rulings were biased.
Lobbying across the BAC
ATFA co-heads Robert Shapiro and Nancy Soderberg will be meeting with “opinion leaders” and “collecting information” in Buenos Aires today, according to reports. The lobbyists launched a website this week, factcheckargentina.org, as a platform with “resources to verify the myths presented by the Argentine government.”
The site even includes a live clock on how long “Argentina has refused to negotiate.”
ATFA provides some limited background on the sources it cites in its seven PDF files and powerpoints that are on the website addressing such perceived myths.
For instance, the file titled “Political pollster Sergio Berensztein finds popular support among Argentines for settlement with holdouts” does not mention the presentation was given by the former director of the Poliarquía consultancy in November last year.
“It’s a broad survey we did in November last year, but I don’t have recent data on the matter,” Berensztein told the Herald, adding the results “had comprehensively shown people wanted an end to the conflict, but it’s worth noting it was a different economic context — before the recession.”
Unaware that ATFA had cited him, Berensztein played down the significance of the survey, as “people tend to want conflicts to end.”
And the conclusion should not be seen as strange. “Even politicians — none of them are saying we shouldn’t pay,” he concluded.
Another expert cited by the lobbyists is Claudio Loser, a former IMF director who now works with the Centennial Group Latin America and Inter-American Dialogue, whose article covers the negative consequences of not ending the dispute.
“My main concern is that settling should be something positive for Argentina, not that the holdouts get a lot of money,” Loser told the Herald, explaining “there are things that I have written that are consistent” with ATFA’s views.
“Argentina twists and demonizes the role of vulture funds. It’s not that they’re good or bad,” he said, adding “there is currently much noise and fire works … but Argentina will find the solution … (and pay) part in cash and another in bonds.”
Also quoted was Richard Samp, lawyer and chief counsel of the Washington Legal Foundation, who told the Herald the “only connection I had with them was at press briefings they organized.”
Still, it hardly seems surprising that Samp would be seen as sympathetic to the holdout creditors.
“The Washington Legal foundation issued an amicus supporting the holdouts,” he said, emphasizing that should not be interpreted as a blank cheque in agreeing with the creditors on everything either.
For the government, the crux of the dispute currently lies in setting fair negotiating conditions, so that it will not face a flood of litigation from other holdouts and restructured bondholders for having offered a better offer to funds led by Elliot Management’s NML Capital, Aurelius Management.
On Monday, at the first meeting with Pollack, Kicillof insisted on the need for a stay to shield the country from having to default, with the minister describing the sit-down as “an important first step.”
Rumours of an offer
Despite the government saying the meeting had only been a step toward fair negotiating conditions, local online news outlet Infobae yesterday claimed the Economy Ministry had submitted a repayment offer consisting of US$1.65 billion payable in bonds in 2015.
The bonds would be the BONAR 24, which matures in 2024, at an annual rate of 10 percent, which was the same paper used as part of the compensation package to Spanish oil firm Repsol for the nationalization of its majority stake in YPF, and the new BONAR 28.
The offer would allow the ministry to settle the debt without depleting cash from the Central Bank’s foreign reserves and maintaining the total level of debt flat.
A cash payment “is impossible because it would be regarded as a voluntary payment that would trigger the application of the Rights Upon Future Offers (RUFO) clause,” a lawyer close to the negotiations told Infobae.
To avoid any chance of the clause being triggered, Kicillof was said to have asked Pollack to ask Judge Griesa to issue a formal statement clarifying that the payment would not be voluntary, but rather the result of a ruling against the country.
The article soon reverberated in markets, with the country’s bonds surging the most out of emerging markets on speculation that settlement on the defaulted debt had edged closer.
Global dollar-denominated bonds due 2017 surged 4.3 cents on the greenback to 96.55 cents by 1.30pm in New York, according to Bloomberg.
A new meeting with Judge Thomas Griesa’s special master is scheduled for tomorrow in New York.
buenosairesherald.com
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