02/20/2020 - 23:28
- Clarín.com
- Opinion
The removal of the external debt required by the IMF would be 30% on the bonds of private creditors in Argentina . The Fund suggests making a 15% withdrawal of the debt capital and also that the bond payments be postponed for three years.
This grace period would represent (at current value) a cut of another 15%. Thus, between one decision and another, the total discount that the IMF propitiates would be at least 30%. For Kristalina Georgieva it would be the minimum puncture for bondholders to make "appreciable contribution" to Argentina. The number emerged in the negotiations with the mission headed by Julie Kozack. The fine detail depends on the moment of the proposal: it could go up to 40%.
Information already circulates on Wall Street and was transmitted by the Treasury Palace itself yesterday , in contacts with foreign bankers. Martín Guzmán invited several international operators on the eve to suggest different agreement proposals. All banks (City, UBS, JP Morgan) conveyed a concrete idea : for the renegotiation to be successful, Argentina has to offer bonds that have a market parity above the current one.
Now, the average parity is 45% and the “wolves” of Wall Street want the Argentine proposal to place it at 55 or 60% . Only then ensure the success of the exchange.
It is a backlash of Wall Street. They say they have confidential information that the Government and the IMF secretly agreed on a central issue: to make announcements and communications to now lower the price of Argentine bonds in the market and thus improve the negotiating position of the Casa Rosada. Clarín confirmed that there will be a secret mission of top bankers next week in Buenos Aires.
The invitations were sent yesterday and the summit meeting will be between Thursday and Friday of next week. One of the coordinators of the top secret meeting would be the powerful JP Morgan. Between Wednesday and Thursday the heads of the funds that concentrate most of the Argentine debt to begin negotiations will arrive in their private planes.
In the payroll are the debt managers of Greylock, Pimco BlackRock, Fidelity, Templeton and Northem Trust. These funds concentrate 40% of Argentina's debt. They are decisive for the fate of reprogramming and will meet - for the first time - face to face with Minister Guzman. They are known as "The Club of 40".
The minister would listen, but will make a first survey of Argentina's payment proposal. The meeting has high voltage.
Also the "wolves" of Wall Street will see several economists and asked for a political interview: with Sergio Massa . It is not known if they will see Alberto Fernández.
The government wants to speed up the negotiation. The schedule - a big mistake was to establish it - will no longer be fulfilled. There were many sloppiness and unusual events. Guzmán opened a contest to choose the negotiating advisory bank. Four days before the day set for the election, the invitations and conditions to participate in the tender that closed yesterday had not turned.
In the end, and with carelessness, the contest rules were sent only at “midnight” last Saturday. The market insists that there is a strong - and unethical - lobby of President Emanuel Macron in favor of the Rothschild bank, of which he was a partner. Likewise, the Casa Rosada is urged for an issue: the expiration schedule is very heavy as of autumn. May 1,400 million dollars impossible to cancel expire.
The Casa Rosada celebrated the IMF statement as a great triumph . Alberto F. congratulated Guzmán. The text is a political guarantee to Argentina. From the beginning, Fernández prioritized the partnership with the IMF and the document ratifies that political agreement - not technical, nor of a program - with the Fund. But the text of the communiqué is not an adaptation of the organism to the Argentine position, as the official account intends to install and capitalize politically.
The Monetary Fund - and Clarín already anticipated it a long time ago - always wanted and demanded that the bondholders be the ones who make a strong take away from the payment of the Argentine debt. They said it before Alberto assumes.
Kristalina - and the IMF's doctrine for more than 30 years - requires that investment funds make an "appreciable contribution" to compensate for the million-dollar profits they accumulated with Argentina's bicycle. It is about assuming the "moral risk" of speculating with a country that gave succulent and unpayable profits.
The statement is also a blow to the internal front of the IMF. It is addressed to those responsible for the mega-help to Mauricio Macri: David Lipton, already displaced from the vice presidency, Alejandro Werner and Roberto Cardarelli. Werner was excluded from the mission that came to Buenos Aires and replaced by his second.
The trio implemented the US Treasury order to support the re-election of Macri. The internal purge is driven by the European directors of the agency.
The "superficial" reading of the text also avoided two central questions. By admitting the IMF - something obvious because we are in virtual default - that the debt "is not sustainable", also warns of another issue: that Argentina continues with a fiscal imbalance that must correct towards the future and prevents it from paying the debt. He also says that Casa Rosada must "make additional efforts" to lower inflation.
Both paragraphs are linked and translated as follows: that the country should make more adjustments if it wants to close traditionally with the IMF.
In Washington weighting the adjustment that the Pink House already applied in December . It was capitalized: 2.4% of GDP, including the slice to retirees.
They also celebrate that the cut did not generate any social claims. Weigh the ability of Fernandez and Peronism to numb the protest.
Nowhere in the text does the IMF admit that an agreement is being negotiated. Not mentioned. In the “paper” of Wall Street it is speculated that the IMF will grant a political endorsement to the restructuring, but that it will not include - for now - a traditional and concrete agreement.
They argue that neither Kristalina nor Alberto should agree to show support in a difficult program. That would force strong discussions. In addition, there are no debt maturities with the IMF this year and a time window opens until December.
At the highest level of government, it is affirmed that this agreement will only advance once the negotiation with the bondholders has been closed in the fall.
The dialogue between Kristalina and Alberto is fruitful and both would define the moment. Also the two - for example - agreed how they would handle public criticism. This is what the IMF chief asked: "Alberto, you are free to criticize the Fund, but I ask you one thing: always let me know before."
Guzman would have another criterion. He wants to recover the wear and tear of his bad time in Manhattan. In an airtight meeting with his team he said that everything is advanced with the IMF. And that the technical agreement could be closed immediately. It is already known that it would include another formula for retirement assets: there would be no compensation for what was lost and the system would be updated to update the evolution of the collection.
All politicians touched the pension system in the last 40 years. None found the solution.
