UPDATE 1-ISDA declares Argentina in default, bonds extend losses

Fri Aug 1, 2014 12:59pm EDT

(Adds vote results, auction)

By Davide Scigliuzzo

NEW YORK, Aug 1 (IFR) - The International Swaps and Derivatives Association (ISDA) on Friday declared Argentina in default, which could trigger payments worth up to USD1bn on credit default swaps.

ISDA's determinations committee voted unanimously that a "failure to pay" event occurred on July 30, when Argentina missed a coupon payment on some restructured foreign-law bonds.

The ISDA committee will now hold an auction to settle the outstanding CDS transactions.

Argentine bonds extended losses in the immediate aftermath of the decision.

"Generally bonds are lower by 1 to 2 points," one New York-based trader said. "Things got hit further."

Argentina's Discount 2033s denominated in US dollars and euros traded at cash prices as low as 86 and 81 respectively after ISDA's announcement, he said.

A trader in Miami said some accounts took a bet on the Argentine-law bonds, sending them marginally higher, but that overall volumes remain well below previous sessions.

"I saw some buyers of the Boden 2015s, but I think that's too risky as I don't see a solution in the short term," the trader said. "The situation in getting more complicated day by day."

CDS reaction was muted as market participants wait for ISDA's auction process to start and accounts remain hesitant to take positions.

"All prices disappeared," said the trader. "But it is a small market, so there won't be much movement."

The net notional outstanding on Argentina's CDS contracts is just over US$1bn after accounting for offsetting trades, according to data form the Depository Trust & Clearing Corporation. (Reporting by Davide Scigliuzzo; Editing by Marc Carnegie)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.48 | 0 komentar | Read More

Fourth Espirito Santo group's firm files for creditor protection

LISBON Fri Aug 1, 2014 12:05pm EDT

LISBON Aug 1 (Reuters) - ESFIL, a fully-owned subsidiary of Espirito Santo Financial Group, on Friday became the fourth company from the troubled business empire of Portugal's Espirito Santo banking family to seek creditor protection in Luxembourg on Friday.

ESFG, which itself was granted creditor protection earlier this week, said in a statement the filing in a Luxembourg court occurred after ESFIL became unable to meet its obligations under its commercial paper programme and other debt payments. The companies are registered in Luxembourg.

ESFG is also the biggest shareholder of Banco Espirito Santo , which posted a massive loss on Wednesday and now needs a capital increase. (Reporting By Andrei Khalip, editing by David Evans)

16.48 | 0 komentar | Read More

Federal court agrees to suspend Detroit bankruptcy appeals

Fri Aug 1, 2014 2:30pm EDT

Aug 1 (Reuters) - A federal court agreed on Friday to suspend seven cases seeking to overturn a lower court ruling that found Detroit was eligible for municipal bankruptcy.

The Sixth Circuit U.S. Court of Appeals' action followed motions filed on Thursday by attorneys for Detroit pension funds, unions and others requesting that the cases be suspended instead of dismissed until the city concludes a confirmation process for its bankruptcy exit plan.

The appeals court had initially scheduled oral arguments for July 30 for the seven cases. But those proceedings were eventually canceled at the request of the city and the appealing parties due to actual or pending settlements.

In the wake of the cancellations, the appealing parties were given a Thursday deadline to inform the court if they wanted to dismiss their cases.

Instead of dismissals, the parties asked the court to hold off on ruling on any issues in the cases, adding however that the appeals process could be resumed if Detroit's current plan to adjust $18 billion of debt is changed or fails to be confirmed.

The appeals took issue with U.S. Bankruptcy Judge Steven Rhodes' contention that pensions could be cut as part of the city's restructuring efforts despite protections in the Michigan Constitution against impairing public worker pensions. They also argued against the legality of a Michigan law that enabled Detroit's state-appointed emergency manager to file the bankruptcy case in July 2013 with the governor's permission.

Since Rhodes' December ruling, Detroit has reached settlements with most of its major creditors. Active and retired city workers overwhelmingly voted to accept the city's debt adjustment plan, which calls for cuts to retiree pensions and health care.

Rhodes has set an Aug. 21 start date for the confirmation hearing, which will determine if the plan is fair and feasible. (Reporting by Karen Pierog; editing by Andrew Hay)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.48 | 0 komentar | Read More

Fourth Espirito Santo group's firm files for creditor protection

LISBON Fri Aug 1, 2014 12:05pm EDT

LISBON Aug 1 (Reuters) - ESFIL, a fully-owned subsidiary of Espirito Santo Financial Group, on Friday became the fourth company from the troubled business empire of Portugal's Espirito Santo banking family to seek creditor protection in Luxembourg on Friday.

ESFG, which itself was granted creditor protection earlier this week, said in a statement the filing in a Luxembourg court occurred after ESFIL became unable to meet its obligations under its commercial paper programme and other debt payments. The companies are registered in Luxembourg.

ESFG is also the biggest shareholder of Banco Espirito Santo , which posted a massive loss on Wednesday and now needs a capital increase. (Reporting By Andrei Khalip, editing by David Evans)

16.47 | 0 komentar | Read More

UPDATE 1-ISDA declares Argentina in default, bonds extend losses

Fri Aug 1, 2014 12:59pm EDT

(Adds vote results, auction)

By Davide Scigliuzzo

NEW YORK, Aug 1 (IFR) - The International Swaps and Derivatives Association (ISDA) on Friday declared Argentina in default, which could trigger payments worth up to USD1bn on credit default swaps.

ISDA's determinations committee voted unanimously that a "failure to pay" event occurred on July 30, when Argentina missed a coupon payment on some restructured foreign-law bonds.

The ISDA committee will now hold an auction to settle the outstanding CDS transactions.

Argentine bonds extended losses in the immediate aftermath of the decision.

"Generally bonds are lower by 1 to 2 points," one New York-based trader said. "Things got hit further."

Argentina's Discount 2033s denominated in US dollars and euros traded at cash prices as low as 86 and 81 respectively after ISDA's announcement, he said.

A trader in Miami said some accounts took a bet on the Argentine-law bonds, sending them marginally higher, but that overall volumes remain well below previous sessions.

"I saw some buyers of the Boden 2015s, but I think that's too risky as I don't see a solution in the short term," the trader said. "The situation in getting more complicated day by day."

CDS reaction was muted as market participants wait for ISDA's auction process to start and accounts remain hesitant to take positions.

"All prices disappeared," said the trader. "But it is a small market, so there won't be much movement."

The net notional outstanding on Argentina's CDS contracts is just over US$1bn after accounting for offsetting trades, according to data form the Depository Trust & Clearing Corporation. (Reporting by Davide Scigliuzzo; Editing by Marc Carnegie)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

Federal court agrees to suspend Detroit bankruptcy appeals

Fri Aug 1, 2014 2:30pm EDT

Aug 1 (Reuters) - A federal court agreed on Friday to suspend seven cases seeking to overturn a lower court ruling that found Detroit was eligible for municipal bankruptcy.

The Sixth Circuit U.S. Court of Appeals' action followed motions filed on Thursday by attorneys for Detroit pension funds, unions and others requesting that the cases be suspended instead of dismissed until the city concludes a confirmation process for its bankruptcy exit plan.

The appeals court had initially scheduled oral arguments for July 30 for the seven cases. But those proceedings were eventually canceled at the request of the city and the appealing parties due to actual or pending settlements.

In the wake of the cancellations, the appealing parties were given a Thursday deadline to inform the court if they wanted to dismiss their cases.

Instead of dismissals, the parties asked the court to hold off on ruling on any issues in the cases, adding however that the appeals process could be resumed if Detroit's current plan to adjust $18 billion of debt is changed or fails to be confirmed.

The appeals took issue with U.S. Bankruptcy Judge Steven Rhodes' contention that pensions could be cut as part of the city's restructuring efforts despite protections in the Michigan Constitution against impairing public worker pensions. They also argued against the legality of a Michigan law that enabled Detroit's state-appointed emergency manager to file the bankruptcy case in July 2013 with the governor's permission.

Since Rhodes' December ruling, Detroit has reached settlements with most of its major creditors. Active and retired city workers overwhelmingly voted to accept the city's debt adjustment plan, which calls for cuts to retiree pensions and health care.

Rhodes has set an Aug. 21 start date for the confirmation hearing, which will determine if the plan is fair and feasible. (Reporting by Karen Pierog; editing by Andrew Hay)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

ISDA asked to consider credit event on Argentina CDS

By Davide Scigliuzzo

Thu Jul 31, 2014 9:12am EDT

NEW YORK, July 31 (IFR) - The International Swaps and Derivatives Association has received its first request to consider whether a credit event has occurred on Argentina's credit default swap contracts (CDS), according to the ISDA website.

Swiss bank UBS on Thursday asked ISDA's determinations committee to consider whether a "failure to pay" credit event has occurred, citing a missed deadline to deliver interest payments to exchange bondholders.

If the request is accepted, the 15-member committee will vote on whether a payment on Argentine CDS contracts can be triggered. (Reporting by Davide Scigliuzzo; Editing by Marc Carnegie)

16.47 | 0 komentar | Read More

UPDATE 1-ISDA agrees to consider credit event on Argentina CDS

Thu Jul 31, 2014 10:26am EDT

NEW YORK, July 31 (IFR) - The International Swaps and Derivatives Association (ISDA) has agreed to consider whether a credit event has occurred on Argentina's credit default swap contracts (CDS), according to its website.

Swiss bank UBS on Thursday submitted the request for ISDA's determinations committee to consider whether a "failure to pay" credit event has occurred, citing a missed deadline to deliver interest payments to exchange bondholders.

ISDA's 15-member committee is expected to vote on whether a payment on Argentine CDS contracts can be triggered in the next couple of days, according to a source close to the discussions. (Reporting by Davide Scigliuzzo; Editing by Marc Carnegie)

16.47 | 0 komentar | Read More

Federal court asked to suspend Detroit bankruptcy appeals

July 31 Thu Jul 31, 2014 7:42pm EDT

July 31 (Reuters) - A federal court was asked on Thursday to suspend seven pending appeals over Detroit's eligibility for bankruptcy until the city concludes a confirmation process for its plan to adjust $18 billion of debt.

Attorneys for the city, Michigan, Detroit pension funds, unions and others that filed five of the appeals said moving forward with the cases now would "significantly undermine" settlements and mediation and could delay the city's exit from the biggest municipal bankruptcy in U.S. history. But they also declined to dismiss their cases at this point.

"Holding the appeals in abeyance also ensures that this court will not unnecessarily decide important state and federal constitutional issues," the attorneys said in a letter to the 6th Circuit Court of Appeals in Cincinnati.

They added that the federal appeals court would retain jurisdiction after the plan confirmation process to review a December ruling by U.S. Bankruptcy Judge Steven Rhodes that found Detroit was broke and eligible for Chapter 9 municipal bankruptcy.

Parties in the remaining two appeals asked the court separately to suspend their cases, according to the letter.

The appeals court had initially scheduled oral arguments for July 30 for the seven cases. But those proceedings were eventually canceled at the request of the city and the appealing parties due to actual or pending settlements. In the wake of the cancellation, the appealing parties were given a Thursday deadline to inform the court if they wanted to dismiss their cases.

The appeals took issue with Rhodes' contention that pensions could be cut as part of the city's restructuring efforts despite protections in the Michigan Constitution against impairing public worker pensions. They also argued against the legality of a Michigan law that enabled Detroit's state-appointed emergency manager to file the bankruptcy case in July 2013 with the governor's permission.

Since that December ruling, Detroit has reached settlements with most of its major creditors. Active and retired city workers overwhelmingly voted to accept the city's debt adjustment plan, which calls for cuts to retiree pensions and health care.

The pension cuts would be mitigated by the so-called grand bargain, which taps into $466 million pledged by foundations and the Detroit Institute of Arts and $195 million in state money.

The attorneys in their letter warned the appeals court that the money could be jeopardized if the court should rule at this juncture in the bankruptcy. Rhodes has set an Aug. 21 start date for the confirmation hearing, which will determine if the plan is fair and feasible.

Meanwhile, the appeals would remain alive should the current plan change or fail to be confirmed.

"In the event the bankruptcy court confirms a plan that does not reflect the settlements and grand bargain, keeping these fully-briefed appeals in place ensures that the court promptly could hear oral argument and decide the eligibility issues," the letter said.

(Reporting By Karen Pierog; Editing by Cynthia Osterman)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

Argentina credit story grows murkier as talks collapse

By Paul Kilby

Wed Jul 30, 2014 7:04pm EDT

NEW YORK, July 30 (IFR) - Argentina's murky credit story grew even more complicated Wednesday as the US mediator said the country was headed to default after last-ditch talks with holdout creditors failed.

With years of negotiations appearing to come to nought, Economy Minister Axel Kicillof said the country could not obey a US court order to pay the holdouts in full.

Just hours after S&P downgraded the country to selective default, mediator Daniel Pollack also said Argentina would "imminently" be in default on its obligations.

"The ordinary Argentine citizen will be the real and ultimate victim," said Pollack, after the talks failed to placate the holdouts demanding full payment on their bond holdings.

He said it was "not a mere technical condition but rather a real and painful event that will hurt real people".

Repeatedly calling the holdouts "vulture funds", however, Kicillof rejected the notion that the country was in default and said it had offered the funds the same deal put to other creditors when Argentina restructured its debt in 2005 and 2010.

That offer was not accepted by the funds, which have seen Argentina fight all the way to the US Supreme Court against a ruling by Judge Thomas Griesa that the country must make holdouts whole when it makes its next bond payment.

Failure to make that coupon payment today - after the end of a 30-day grace period - effectively left Argentina in technical default.

Coming late in the day, the latest twists and turns had little immediate impact on Argentine bond prices, which in fact rallied throughout the day on hopes of a breakthrough.

Analysts are largely expecting a knee-jerk reaction to any default news, but it is unclear how much the pendulum will swing back. Up until now, there has been a floor under Argentina bond prices, largely thanks to the assumption that the government would quickly seek ways to pay exchange bondholders.

Griesa has blocked that US$539m payment in the absence of a payment to the holdouts as well, and the Supreme Court declined to hear Argentina's appeal.

Standard & Poor's said it had downgraded the sovereign to selective default because the payment had not been made.

But the agency also affirmed Argentina's local currency rating at CCC+, arguing that "potential disruptions to interest payments on Argentina's external debt are not likely to further erode its ability to service its debt issued in its local currency and under its local law".

Kicillof said he would return home later Wednesday.

Argentina has repeatedly insisted that paying the holdouts in full would be too expensive - and would trigger so-called RUFO clause in the restructured debt that could leave the country open to new waves of claims against it.

Due to cross-default language in the documents, the restructured bond holders could accelerate demands for payment if 25% in each series agree to do so.

But most analysts see that as an unlikely and perhaps even counterproductive course of action. (Reporting by Paul Kilby and the IFR team; Additional reporting by Reuters News; Editing by Marc Carnegie)

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More