Wednesday, June 25, 2014

Argentina Debt - The Framework of the Negotiations

Argentina Debt - The Framework of the Negotiations
Eugenio A Bruno
Garrido Law Firm

Argentina asked to have fair and balanced negotiations. On Monday the government asked Judge Griesa to grant a new "stay" in order to "protect" the negotiation process. Argentina wants to negotiate under circumstances that (1) allow it to continue paying the bonds restructured under the debt exchanges of 2005 and 2010 (in particular, the payment coming due on June 30, 2014); (2) avoid having the pressure to reach a settlement in a short period of time (less than 40 days); and (3) set forth a legal protective path until the termination of the effectiveness of the RUFO clause (December 31, 2014) in order to avoid potential claims from the exchange bondholders. Argentina considers the holdout debt is not only the claim under the NML case, but it also extends, financially, to a larger amount that would include the potential claims from other holdouts (USD 15b according to the government), and if it is not done properly, it would also extend to potential contingencies from the exchange bondholders under the RUFO.

Yesterday, NML responded Argentina`s petition by arguing that a "new stay" has no legal basis under the applicable laws and rules. NML mentions that if the negotiations advance the parties may still jointly ask the court a new stay in order to complete the negotiations and implement a settlement. NML highlights that the claim should be limited to this particular case.

Judge Griesa must next decide on whether or not the new stay should be given. Under normal circumstances a stay in this stage of the process (firm and definitive rulings) should not have legal basis to be granted. However, given also the particular circumstances of this complicated case it may not be ruled out the possibility that the judge accords to grant the stay, but the chances are more inclined towards the first interpretation.The concers of Argentina are reasonable but it may not be accomodated by the judge.


Tuesday, June 24, 2014

Argentina Debt - Paper: Main Terms and Conditions of the Argentine Bonds

Argentina Debt - Paper: Main Terms and Conditions of the Argentine Bonds
Eugenio A Bruno
Garrido Law Firm

Argentina Debt - The Settlement Clause

Argentina Debt - The Settlement Clause
Eugenio A Bruno
Garrido Law Firm

Monday, June 23, 2014

Argentina Debt - Need for an Integral Plan

A Integral Plan to Settle the Argentina Debt
Eugenio A Bruno

1) Need for a complete solution

Given the amount of the debt in default there is a need to have a complete solution of the Argentina debt in default. We believe that isolated arrangements are not enough given the fact that, after the resolution from the United Courts, all hold-out debt will be beneficiary of similar rulings to attach the flow of payments to the so called Exchange Bondholders. There is no money to make individual arrangements of several billion dollars permanently and the risk of having continued attachments is too high. Therefore, it is more beneficial to all parties (Argentina, the holdouts and the exchange bondholders) to reach a complete settlements of the whole 7% of the debt in default.

2) Amounts

At a glance, the principal amount in default is USD 6.6b. Approximately, 2/3 of said debt is subject to New York law and jurisdiction and the remaining 1/3 is subject to European laws and courts. As of December 2014, the debt in default will be approximately USD 25b. For example, under Judge Griesa`s rulings the principal amount of the claim is USD 428 and the payment judgment is USD 1.55b as of 2013 and more than USD 1.65b as of December 2014. 
In Europe the amount is USD 2.4b and with interest it is USD 9.6b. Therefore, the total claim in default is USD 25b.

An important percentage of the debt in default under New York is subject to judicial claims with firm and definitive rulings but without the application of the pari passu attachments. But it is expected that the plaintiffs under said rulings will petition the application of the pari passu embargos very soon and it is also expected that they will receive such benefit because they have the same bonds and rulings than the ones under the NML case.

In Europe, Italian bondholders are suing before the ICSID tribunal which granted jurisdiction to hear the case and it is expected to issue the laudum in the next months. According to the representatives of the Italian bondholders, if the laudum is in their favor, they will file them before the Griesa`s court for execution.

3) Guidelines of the Integral Plan

3.1. Proposal based on the payment capacity of Argentina
3.2. Addressed to all holdouts
3.3. Settle all the claims and lawsuits
3.4. Have the support from the Exchange Bondholders
3.5. Issue new bonds for new money to finance energy projects
3.6. Liability management to reprofile the debt payments coming due in the next 2-4 years.
3.7. Reduce the country risk to 200 basic points.

Saturday, July 27, 2013

Argentina Debt The French Strategy

I think France saw a great opportunity to step up helping Argentina some weeks ago when it seemed that both the United States Executive Branch and the French-led IMF would file "Argentina´s best friend" briefs with the U.S. Supreme Court. Wanting to play a role in international finance matters, France would also be present in the "lawsuit of the century" in debt restructurings. Leadership issues involved. And also the "carrot" to Argentina because of the debt with the Paris Club. Besides, it would also show that France understands debt crises and therefore it would have more authority in the probably upcoming European debt restructurings. A three-fold great strategy for France. International leader along with the U.S. and the IMF, helping Argentina (to have Argentina in Paris) and become an authority in Europe.

Without the U.S. and the IMF, the French friend brief is left alone, for the moment. Therefore its firepower is reduced, but unless it is in the game, and may use it with Argentina at the Paris Club and in Europe for the debt restructurings of some of its members. Of course, it would be better if the U.S. Supreme Court pays attention to its brief. Without the U.S. and the IMF I would be pessimistic for now. However, we still have the next round of cert petitions regarding the upcoming ruling from the Second Circuit on the payment formula and the injunctions on the Bank of New York and other financial institutions. Which is another opportunity for France to step as is it for the U.S. Executive Branch and the IMF. The Supreme Court would then pay more attention.

Eugenio A Bruno

Friday, July 26, 2013

Disputes between the United States and Argentina governments?

I dont think there is a dispute between these two governments, unless there is one, in which case the situation may be very difficult. Probably the IMF spokeman misexplained the real situation meaning that there was a discrepancy between the U.S. and other members regarding the IMF eventual brief. Not a dispute between the U.S. and Argentina. The existing dispute is between Argentina and certain private creditors, who are litigating against Argentina before the U.S. courts. Eventually there could be a dispute between Argentina and the U.S. Courts down the road. But not now.

I also understand that informally the U.S. government has indicated that nothing has changed and they would be ready to step up if the U.S. Supreme Court asks its opinion. They probably would also file an UNINVITED brief in the upcoming appeal regarding the injunction against the Bank of New York Mellon if the ruling from the Second Circuit is negative to Argentina.

Of course, an eventual amicus brief from the U.S. government helps a lot, but obviously the ultimate decision comes from the Supreme Court on (i) granting or denying the certiorari petitions, (ii) staying the decisions from the Second Circuit, (iii) asking Argentina a bond as a condition for the granting the cert petitions, and (iv) deciding the legal issues.

Eugenio A Bruno

Thursday, July 25, 2013

What to make of the latest

The United States decided not to participate now in favor of Argentina as an UNINVITED amicus. This negative affected the decision from the IMF not to file a brief as announced.

Questions for the near future:

1) Will the Supreme Court ask the U.S. to file an INVITED brief?

2) If so, what the U.S. government will?

3) After the upcoming ruling from the Court of Appeals, Argentina will appeal to the U.S. Supreme Court if the ruling is negative (not decided yet particularly on the attachments of the Bank of New York). In this case, the interest to the U.S. government may be more important as the payment system of New York may be affected. In this case, the U.S. government may decide to file an UNINVITED amicus brief, but this remain to be seen.

4) Of course, if no amicus brief from the U.S. government, the situation with the Supreme Court will be difficult. What will the Court do absence U.S. help?

5) If the Supreme Court accepts the appeal (either the existing one or the upcoming), will it be with Stay of Execution of the rulings from the Court of Appeals?

Eugenio A Bruno