Ashmore latest :
..Argentina
Moody’s raised Argentina’s local currency ceiling from Caa1 to B3 and its foreign currency ceiling from Caa3 to Caa1.
This allows corporates to be upgraded several notches above the sovereign, which is rated Ca by Moody’s.
The upgrade reflects greater predictability and consistency in economic policy, which has led to a rapid reduction in monetary and fiscal imbalances.
Moody’s said the Argentinian government has eased restrictions on cross-border payments and foreign exchange (FX) convertibility, increasing foreign currency liquidity.
There has also been a shift toward reducing the role of the state in the economy, with fewer interventionist policies that lower the risk of transfer and convertibility issues in the event of a sovereign debt default."
V market-friendly.
And Trump's inauguration in a week.
FWLIW, Jared Dillian thinks Canada is going to be the next Argentina.
You read it here first.
NAI, DYOR etc etc
GLA |
Thank you Extrader. Would it be preferable to have or not have OAs in terms of the case i guess that is the question. So the judges make the call re OAs or not? If they decline these does this indicate that they feel that not much more can be brought to the case since this has been going on for so long and so much case material already exists? |
 From Seb, 2 hours ago :
🔴I’ve been asked about the current stage of Argentina’s appeal in the YPF Expropriation Case and when we might expect a decision from the three judges.
• The appeal was formally filed on October 16, 2023.
• All briefs and support from amici curiae were submitted by September 6, 2024.
• On August 7, 2024, the parties requested to hold Oral Arguments (OAs). Having received no response, they renewed the request on November 4. Still, no response.
• According to data from the Second Circuit, 32% of cases include Oral Arguments; the remaining cases are decided without them.
• In the first YPF expropriation appeal in 2016, Oral Arguments were held 216 days after the appeal was filed. The ruling was published in 2018—663 days after filing and 398 days after the Oral Arguments.
• The second appeal has now been pending for 440 days, and it’s still unclear whether Oral Arguments will be held.
• Of the three judges from the first appeal (Winter, Calabresi, and Chin), two remain on the bench (Winter passed away in 2020).
• We do not yet know the identities of the three judges handling the second appeal or whether they will opt to hold OAs.
• The significance of Oral Arguments lies almost entirely in the timeline for receiving a decision.
• If there are no OAs, I would venture to say we’ll see a decision before September 2025.
• If Oral Arguments are held, my opinion is that the ruling won’t be issued until 2026.
The above does/do not preclude the possibility of an earlier negotiated settlement if 'the causes and conditions' are right.
AIUI
GLA |
From FT:
Argentina pays bondholders $4.3bn in key test for Javier Milei
Largest payment since 2020 restructuring boosts bond prices but challenging repayments loom
Argentina’s government has paid $4.3bn to holders of its sovereign bonds, its largest repayment since a 2020 debt restructuring, in a crucial step for libertarian President Javier Milei’s bid to restore confidence in the serial defaulter.
The payment, confirmed by finance secretary Pablo Quirno on Thursday, included $3.7bn to private bondholders, with the rest going to public bodies that hold Argentine debt. The government bought the dollars to make the payment using the fiscal surplus it eked out last year via a severe austerity package.
Sovereign Bond spreads have fallen from 1500bps to 572bp in consequence, making talks re a new IMF facility somewhat more likely
GLA |
Or compare the BUR chart with YPF chart... |
From Seb showing Argentina beginning to rejoin the world's financial markets. Good news.EI BCRA adds tools for the administration of its reserves by agreeing a REPO with international banksThe Central Bank of the Argentine Republic (BCRA) agreed with five leading international banks a passive pass operation (REPO) with BOPREAL Series 1-D securities for the total tendered amount of USD 1,000 million and a final term of 2 years and 4 months.At the inaugural auction held on December 27, the BCRA received bids for USD 2.85 billion, almost three times exceeding the bid amount. Faced with excess demand and in view of the favourable evolution of its international reserves, the BCRA chose not to take a larger amount.The strong interest shown by the main international banks strengthens the process of standardisation in access to international credit markets, in line with the fall in the country risk that accompanies the consistent and sustainable macroeconomic order.For this operation, the BCRA will pay an interest rate equivalent to the SOFR-USD rate plus a spread of 4.75%. This is equivalent to a fixed rate of 8.8% per annum, considering the fixed-floating interest rate swaps quoted on the international market at the same term.This REPO operation with BOPREAL securities provides the BCRA with a new tool to manage its liquidity in foreign currency at a lower cost than that offered by the options available until now. This new REPO tool increases the flexibility of the BCRA to mitigate imbalances that may exist between the supply and demand of foreign exchange in the local foreign exchange market.In this way, the BCRA reduces the risks surrounding the implementation of its exchange rate and monetary policy objectives, and facilitates the anchoring of economic expectations.The sustained effort of the BCRA to increase the liquidity position of its reserves made it possible to ensure the normalisation of international trade payments during 2024. In the goods market, this improvement avoided disruptions in the production chain and mitigated the adverse impact on domestic prices. Unlike what happened during past economic crises, the improvement in liquid reserves made it possible to fulfil all financial obligations in foreign currency of the public and private sectors, both those planned for the year and those corresponding to non-paymentsAccumulated from previous years.The continuous improvement of the international liquidity position of the BCRA by different channels is a necessary condition to move towards the objective of completely lifting, without financial or economic disruption, the exchange restrictions and other regulations implemented in previous years. The BCRA continues to work on expanding the options to strengthen its balance sheet, and simultaneously recover and preserve the external and internal conditions of macroeconomic equilibrium. |
“An unrewarding hold” is a big understatement. Back in 2018, BUR was at £20 per share. Since then, we’ve had the Argentina judgement (a massive positive), over 6 years of further cases settled (a big positive), the US listing (a big positive), a case portfolio now stuffed full of what we can only imagine to be very profitable cases (another big positive) and what’s happened to the share price? Down over 40%, in a soaring broader stock market! Can anybody actually explain this? I’m genuinely puzzled. |
Is it Burford backing Emerson in Morocco? Quote "one of the world's largest and most successful." Emerson had big plans which they developed for the Government of Morocco but relationship looks like they were lead up the garden path. Happy New Year long termers. |
I agree it's been an unrewarding hold. We may still be talking 2026 for YPF but progress is being made and 2025 figures are very beatable. Q4 should be good as company knows fact that companies will be wanting to clear liabilities into their results so settlements should be strong. Here's to the patient. |
$12.50/sub £10 to finish the year? Poor against uk markets, but really dire given a ~45% underperform YTD of US indices - yet another year of hoping for better. |
What is ROW, Extrader? Rest of World? Thanks as always for your excellent posts. |
Argentina may pivot to US (from China)in expansion of its nuclear programme.
hxxps://slguardian.org/argentina-bets-on-nuclear-power-for-ai-growth-with-u-s-investment-partnership/
Already has 3 x nuclear power plants and strong scientific/technical* skillset already, uranium deposits (that haven't been developed as yet) and a cold climate in Patagonia well-suited to AI datacentres.
*including from the Iranians, as it happens.
(1) Something else for Musk to chew over.
Having taken on the US and Mars, he's probably looking at ROW for a fresh challenge.
(2) Argentina will probably have its SMRs up and running before the UK does. Sigh.
GLA |
Thank you Lomax,well spotted.
Adding post judgement interest of a billion dollars to the bill,discounting it by 50% and taking Burford's 42% ( or is it 43) of the overall award into account,say add $200 million to Burford's share.
(I've speculated the post-interest judgement may become part of a ' sweetner' when it comes to negotiations but less so the longer Argentina keep fighting the judgement.After all,all the legal costs are bourn by Burford)
To an extent,the delay in getting down to a negotiated settlement has been something of a ' win-win' situation.President Javier Milei has,in some respects,improved his position.Argentina's bonds have risen in that time,the premium having fallen again this week 4.4% over US Treasuries,to 677 basis points.When Argentina finally issue bonds,they will be more valuable and cost Argentina less to issue. |
Moneyweek today:
Profit from righting a wrong In 2025 we should see the outcome of Burford Capital’s (LSE:BUR) litigation-funded court case against the Argentinian government, says Bruce Packard. The case dates back to the expropriation (theft) of YPF, the energy company, from investors. In September 2023 Judge Preska in New York awarded $16.1bn in damages to the plaintiff’s, of which Burford’s share could be $6.3bn (£5.3bn or £23 per share). That compares with a current market value of $3bn (£2.45bn or 1,060p per share) carried on Burford’s balance sheet.
After BUR’s win in September, Argentina filed an appeal; a decision is likely in 2025. BUR expects a negotiated result at under 100% of the judgement value, but the stock price implies either that the case will be lost on appeal or that Burford won’t be able to enforce the judgement of a US court on a sovereign state.
The firm also enjoyed a record quarter in 2024, generating cash receipts of $310m. Realisations from the core portfolio of disputes doubled year on year to $165m. Burford is a share that investors struggle to value: the price peaked at £20 per share in 2018 before slumping when Muddy Waters, the short seller, questioned the group’s fair value accounting write-ups for court cases such as the YPF dispute. Even if BUR doesn’t receive the full £23 per share from Argentina, a judgement in its favour and enforcement should validate its litigation-finance business model. |
Then there's this one, also from seb :
i🔴Wall Street Journal interview to President Milei:
"President Javier Milei said U.S. President-elect Donald Trump will help boost his free-market overhaul of Argentina as this large South American nation, which had long kept the U.S. at arm’s length, repositions itself closer to Washington. In an interview, the 54-year-old firebrand said that he is betting Trump is likely to champion Argentina’s bid to get billions of dollars in new financing from the International Monetary Fund"/i
GLA |
Milei has said that he wants/ knows he has to respect the rule of law to attract sustainable foreign investment.
Why should an 'autocratic' Trump who admires Milei (supposedly) wish to frustrate him...esp as US investors are likely the main beneficiaries of enforcement?
Remember, too that Preska is a Federalist...and Trump has appointed ex-YPF lawyer Landau as Deputy Secretary of State (see past posts on this man).
Your assertion is inconsistent, AFAICS, with the facts in front of us.
GLA |
I cannot share the optimism about the share price performance.
We see an intact Burford Capital that has delivered above average results in its 2024 quarterly reports. The share price is not rewarding this, which is disappointing enough as the legal pipeline is full and Burford is delivering.
The share price is fully linked to the expectation of execution in Argentina, see the recent share price collapse.
We are now entering a four-year period of dealmaking in the US and mutual expressions of sympathy between two presidents with similar economic policies. Trump has already proven that he can make autocratic decisions and get the courts behind him. I don't see the US government seeking any real enforcement, see also Séb's post from 12.11.
I still hold the stock, but I don't see any real improvement in the share price at the moment if there is no enforcement in Argentina. |
That's a fascinating find,Extrader.Thank you and Seb. |
And if you've got the time to spare, Seb has just posted this :
🔴If you’re interested in a good podcast about the litigation risk that Argentina is facing, I’m sharing a podcast published this Friday by the lawyers currently suing Argentina in: (1) Euro GDP Warrants, (2) Attestor Master, and (3) Province of Buenos Aires defaulted debt case.
GLA |
I believe the hunt is nearly over. It may well be towards the back end of 2025 when we are rewarded. Not long now, particularly if you have been invested here a long time. |
You can turn around a country's economic fortunes if you are radical enough (though it takes time), you can even change the culture of a country if you try hard enough (look at our lot) but if you want voluminous capital flows through your country then you have to be welcomed back into the pack. Patience guys, 2025 is just days away. |
Worth listening to : Milei interviewed by The Spectator.
45 mins, but well worth it, IMO.
Milei presents well, not as some kind of academic nut-job, but very human in his excitement at meeting Sylvester Stallone (alongside Trump and Musk) and his fanboy enthusiasm for the Rolling Stones, the Beatles, Byron, Shakespeare (alongside Thatcher) etc.
Discusses pragmatically amongst other things : Trump's tariffs; the Malvinas; and his discovery that China is presenting as a good, respectful partner.
He'll fight Argentina's corner- but cleanly- was the clear impression I got.
IMO, DYOR, etc etc
GLA and ATB |
How can this post possibly deserve a thumbs down? Good link, thanks for sharing. |
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