Kicillof, Capitanich, and Zannini held a meeting in Congress today (photo: Prensa HCDN/Télam/ef)
Economy Minister Axel Kicillof announced yesterday the next steps the government is planning to take on the vulture funds dispute, after the US Supreme Court rejected the Argentine appeal on Monday.
Kicillof stated that the government’s priority will be to pay off the exchange bondholders. In order to do this, they will offer to exchange their current bonds for new ones payable in Argentina, rather than in New York. The rest of the conditions attached to the bonds would remain the same. This way, Argentina would avoid having to deposit that money in a US bank, where it would be seized if the holdouts are not paid at the same time, as per Judge Thomas Griesa’s ruling. Whilst this would allow the country to fulfill its obligations with the 92.4% of bondholders that participated in the 2005 and 2010 debt swaps, it would still be at risk of a technical default. There are also concerns that, due to internal procedures, some bondholders would be unable to accept bonds outside of US jurisdiction.
At the same time, the government will seek to negotiate with Judge Griesa and the vulture funds alternative ways to comply with the ruling, which demands the holdouts be paid US$1.3bn in full. “If a ruling says ‘commit suicide’, we can’t accept it,” said Kicillof.
In a surprise move today, Judge Griesa called the legal team representing Argentina in the US for a hearing this afternoon at 3pm Argentine time. In it, the Argentine representatives informed the judge that the government “plans to be here [in New York] next week to negotiate with the holdouts and resolve this situation.” The judge warned the government against trying to circumvent his ruling and stated that an attempt to change the location of the payments to the exchange bondholders would be considered contempt.
Earlier today, minister Kicillof, Legal Secretary Carlos Zannini, and Chief of Cabinet Jorge Capitanich met in Congress with the leaders of the parliamentary groups of both the Senate and the Chamber of Deputies, to inform them of the strategy the government will follow on the case. The opposition leaders expressed their support to the government in the upcoming negotiations and condemned the actions of the vulture funds, although some also criticised the government’s strategy thus far.
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