November 28, 2014
Foreign private banks still pursue deal
Although a first strategy headed by Argentina’s ADEBA group of banks that aimed at buying defaulted bonds from vulture funds went wrong yesterday, negotiations with holdout hedge funds were being resumed today now with foreign private banks – such as the Citibank, the JP Morgan and the HSBC -, taking the lead in talks overseen both from New York and Buenos Aires.The move involves a u$S1.4 billion dollar offer to vulture funds suing Argentina over its defaulted bonds. Creditors were pushing for collecting u$S 700 million before the end of the year. Banks aim at making a first payment now of u$s250 million and the rest in other payments.
Following the failure in negotiations, executive of Banco Macro Sebastián Palla headed back to Argentina yesterday. According to sources familiar to the story, Wednesday’s outcome was a result of Argentine lawyers warning about the RUFO clause - that prevents Argentina from offering other investors better terms than it offered them in the 2005 and 2010 debt swaps – being triggered if such accord was set.
No deal with government either
Meanwhile, Economy Minister Axel Kicillof held a press conference on Wednesday to confirm that no agreement had been reached with vulture funds either saying the federal government offered hedge funds suing the country over its defaulted bonds “similar conditions” to enter the debt swap Argentina carried out in 2005 and 2010.
The government “will not sign anything that could jeopardize the future of the country,” Kicillof stated following a round-the-clock meeting with court-appointed mediator Daniel Pollack in New York.
Kicillof added the government will analyze “every possible option” to pay the bondholders that did not accept the 2005 and 2010 debt swaps.
“We consider the situation is unfair,” said the Economy Minister during a press conference held at the Argentine consulate in New York City that followed the meeting with Pollack.
“This is not a default. Default is not to pay. Default is a consequence of a country’s lack of liquidity, not its cause,” Kicillof said.
“Argentina has money. Argentina pays and will continue to pay exchange bondholders. And we also want to reach a fair, sustainable agreement with 100% of bondholders, but we do not want to break our compromises,” he added.
Kicillof revealed Argentina made two offers to holdouts. Both were rejected. The first one was a stay request in order to continue negotiations, and the second one was an offer to restructure their debt within the same conditions agreed in the 2005 and 2010 swaps.
“Vultures wanted to receive payment above the ones made to exchange bondholders. This would be illegal, as the RUFO clause states Argentina cannot make a better offer than the one reached during the 2005 and 2010 negotiations,” Kicillof explained.
“They want us to break the law but we will not sign any agreement that compromises the country’s future,” he concluded.