Cravesy News: 07/04/14

Caught Between 'Partial' Judge and Debt Default, Argentina Looks for Settlement with 'Vulture Funds'

Argentina's President Cristina Fernandez de Kirchner(Reuters)

The troubled Argentine government is sending a team to New York to discuss a settlement with holdout funds, while it continued to express its dislike over the "biased" order from a US judge.

The government will send its team on 7 July to negotiate with the so-called vulture funds through a court-appointed mediator.

Despite the bitter spat with the holdout funds, the talks will be crucial for Argentina, as a failure to reach settlement could force the country into default, making it further difficult to obtain funding from international capital markets.

Argentina's reputation among international investors had also been tainted due to its spat with Spanish oil company Repsol over the nationalisation of energy company YPF, in which Repsol had a majority stake. Nevertheless, Repsol and Argentina had settled their dispute.

"At some point, Argentina will have no choice but to negotiate. I think that Argentina harbours more ire for the holdouts than for Repsol, and that this is a more public and longer spat than Repsol," David Tawil of Maglan Capital, a New York-based hedge fund focused on distressed debt and equities, told IBTimes UK.

Speaking about the settlement, Tawil said "the holdouts are ready to relax terms".

"They've previously said that they will take the majority of their payout in debt. Although the holdouts have done everything possible to prosecute their legal and contractual rights, I don't think that they want to be known as the ones who drove Argentina into default," he added.

Argentina has been engaged in a long legal battle with hedge funds, Elliott Management and Aurelius Capital, which refused to take part in the country's debt restructurings. About 92% of the country's creditors agreed to swap debts and accept less money.

Earlier, US District Judge Thomas Griesa ordered that Argentina must compensate the holdout creditors at the same time it pays investors who took part in its debt restructuring.

Argentina claimed that if the country paid the suitors on their terms, it would lead to claims from other holdouts of around $15bn in debt.

The government has been critical of the decision of Griesa, saying it is "absurd" and the judge has been assisting "global usurers".

"A lot of officials in the United States say its judicial branch is independent," Reuters quoted as saying Argentine cabinet chief Jorge Capitanich. "But it is not independent of the vulture funds because its decisions show clear partiality."

The government's coupon payment to restructured bondholders through a New York bank had earlier been blocked by Griesa, but the government is of the view that the money it had deposited with the bank now belongs to the holders of its restructured paper.

"As far as we are concerned, Argentina has fulfilled its obligations," Capitanich said.

"Argentina can argue that they've made the payment to the bank, as custodian for the bondholders; the fact that the bank cannot remit the payment to the bondholders is inconsequential to the issue of whether Argentina has fulfilled its obligations," Tawil said when asked about the alternatives for Argentina to avoid default.

Iraq Isis Crisis: Freed Indian Nurses to Arrive in Kerala's Kochi Shortly

Indian nurses abduction by Iraq Isis militants

Indian nurses walk after they were released by Iraqi Islamist militants, as they arrive at Arbil International Airport, in Iraq's Kurdistan regionReuters

A special aircraft carrying 46 Indian nurses who were abducted by Sunni extremists of the Islamic State of Iraq and the Levant (Isis) in Iraq is expected to land in the southern city of Kochi shortly.

The plane earlier touched down in Mumbai, India's business capital for catering and refuelling.

Apart from the nurses, the flight which originated from the Kurdistan capital of Erbil, was also carrying 130 Indian evacuees.

Officials from the state government of Kerala and India's external affairs ministry are among those on board the flight.

The nurses, all hailing from Kerala, who were abducted in the strife-torn Tikrit, reached Erbil on 4 July.

The release of the Indian nurses is one of the rare positive signs in the intensifying conflict in Iraq where the Sunni Islamist militants are pressing ahead against the Shiite-dominated administration in Baghdad.

Ten Bangladeshi nurses were also abducted along with the Indians.

The abduction of several Indian workers has been posing a major foreign policy challenge for the recently-elected administration led by Prime Minister Narendra Modi.

About 39 Indian workers are still in the custody of the militants and efforts are on to get them released. The Indian government has been scrambling its law enforcement agencies and diplomats in order to rescue them.

A crisis management committee, chaired by India's foreign minister Sushma Swaraj, and comprising officials of the Intelligence Bureau, the Research and Analysis Wing and the external affairs ministry is engaged in trying to get the abducted people released.

The release of the nurses is seen as a diplomatic coup for the Modi administration.

Swaraj is believed to have held a series of back-channel talks with several countries including Syria, Jordan and Turkey in order to facilitate the release of the nurses.

As many as 10,000 Indian workers were present in Iraq before the start of the recent turmoil.

Pictures of the Week: Best Photos of Past Seven Days

Festival goers watch a laser and pyrotechnics show at the Arcadia arena on the fourth day of the Glastonbury music festivalReuters

Gilles of Binche surround a performer dressed as a witch as they take part in a procession during an annual medieval pageant marking the historical entry of Charles the Fifth, his son Don Philip, infant of Spain and Duke of Brabant, and his sisters, Eleanor of Austria, Queen of France and Mary of Hungary into Brussels in 1549Reuters

A bolt of lightning strikes One World Trade Center in Manhattan as the sun sets behind the city after a summer stormReuters

The eye of Hurricane Arthur is seen over the Atlantic in this photo from the International Space Station tweeted by European Space Agency astronaut Alexander GerstReuters

Hindu priests sit in cauldrons of water and perform a special prayer for rain, in the western Indian city of Ahmedabad. India's monsoon rainfall was 43 percent below average in June, the weather office said, the weakest first month of the season in five yearsReuters

A girl wearing a faeces-shaped hat prepares to slide down into a large toilet at the Miraikan National Museum of Emerging Science and Innovation in TokyoReuters

Children in gowns and mortarboards pose for pictures during their kindergarten graduation ceremony, in Wenxian county, Henan province, ChinaReuters

A life-sized Thomas the Tank Engine makes a test run in the mountains on a line run by Japan's Oigawa railway near the city of Shimada in Shizuoka prefecture, west of TokyoAFP

The Queen presses the button to release a bottle of whisky to formally name the Royal Navy's biggest ever ship, HMS Queen Elizabeth, at Rosyth DockyardGetty

The Queen and Duke of Edinburgh attend the Thistle Service at St Giles' Cathedral in EdinburghGetty

Prince Harry puts on a fireman's helmet at Valparaiso Fire Station during his visit to ChileGetty

Members of the June 2014 graduating class of the New York City Police Academy embrace during their graduation ceremony at Madison Square Garden in New YorkReuters

Two men dressed as Royal Canadian Mounted Police officers kiss during the WorldPride Parade in TorontoReuters

Two men with a baby share a kiss as they take part in the annual Pride In London paradeGetty

Artist Jade Little touches up body paint on model Renee Somerfield, as she poses for a new advertisement by People for the Ethical Treatment of Animals (PETA) in SydneyReuters

A participant of the "Zombie Takeover of Coney Island" poses for a portrait in Coney Island in the Brooklyn borough of New YorkReuters

Master barber Rob Ferrel cuts the likeness of Lionel Messi on the head of customer Vincent Hernandez at his barbershop in San Antonio, Texas, ahead of the World Cup match between Argentina and SwitzerlandReuters

Bodybuilders flex muscles on stage during the Hong Kong Bodybuilding ChampionshipGetty

Switzerland fans cheer prior to the World Cup match against Argentina at the Corinthians Arena in Sao PauloAFP

A Brazil fan puts on his costume before watching a telecast of the 2014 World Cup match between Brazil and Chile, at a Fifa fan area in Sao PauloReuters

Fans watch the men's singles tennis match between Andy Murray of Britain and Roberto Bautista Agut of Spain on Centre Court at the Wimbledon Tennis ChampionshipsReuters

Sophie McKinna competes in the Women's Shot Put Final during day two of the Sainsbury's British Championships at Birmingham Alexander StadiumGetty

Shi'ite volunteers, who have joined the Iraqi army to fight against Isis, demonstrate their skills during a graduation ceremony after completing their field training in NajafReuters

A Palestinian stone-thrower takes cover during clashes with Israeli police in Shuafat, an Arab suburb of JerusalemReuters

Bat-Galim Shaer (R) and Iris Yifrah (C), mothers of two of the three Israeli teens who were abducted and killed in the occupied West Bank, mourn during the joint funeral of their sons in the Israeli city of Modi'inReuters

An Iraqi mother who fled fighting in the city of Tal Afar rocks her twin children in the back of a pick-up truck as they try to enter a temporary displacement camp in KhazairGetty

An officer of Malaysia's Islamic authority uses a telescope to sight the new moon of Ramadan, in Putrajaya outside Kuala LumpurReuters

Members of the public enjoy the views from "London's highest lawn" at the Shard in London. At 243.84 metres above London Bridge, the observation platform has been decorated with astroturf and will host a giant Fortnum and Mason picnic on August 10AFP

Rescue workers try to reach vehicles trapped underneath a bridge that collapsed while under construction in Belo Horizonte, Brazil, killing at least two peopleReuters

Rescue workers conduct a search operation for survivors at the site of a collapsed 11-storey building that was under construction on the outskirts of the southern Indian city of ChennaiReuters

Policemen and firefighters search in the wreckage of a cargo plane ferrying khat to Somalia which crashed at a commercial building in a Nairobi suburb shortly after takeoffReuters

A firefighter holds a red panda by its tail while removing it from a tree at a residential area in Kunming, Yunnan province, ChinaReuters

A baby walrus is watched over by her mother Dyna at the Hagenbeck Zoo in Hamburg. The nameless calf was born June 15Reuters

World Bank Announces $400m for Turkey Gas Facility

A worker checks the valve gears at the natural gas storage facility of Turkish Petroleum Corporation in Kinali, some 100 km (62 miles) west of Istanbul(Reuters)

The World Bank will provide $400 million of additional financing for Turkey's first gas storage facility in its underground salt formation at Tuz Golu.

A rapidly expanding population and economy have left Turkey in need of additional energy resources. Ankara is hoping to increase its renewable energy production by 30% by 2023.

"The additional loan would finance $400 million of the cost overrun in the Tuz Golu gas storage facility," said the World Bank in a statement.

The Tuz Golu gas storage facility is located in an underground salt formation close to a salt lake of the same name in southern central Turkey. Upon completion, the facility would have a capacity of 960 million cubic metres of gas per day for up to 20 days.

"Natural gas consumption has grown rapidly in Turkey over the past two decades. Natural gas accounts for almost one third of the country's primary energy supply, and fuels almost 50% of electricity generation," said the World Bank's Martin Fraser in a statement.

"As household and industrial demand increase, natural gas storage facilities constructed under this project will help keep the cost of natural gas more stable across the seasons, give better security of supply, and encourage the construction of gas distribution networks," he added.

Turkey will repay the $400 million over a 16 year period.

General Motors' Woes Continue as Strike Closes South African Plant

Strikes have forced GM to halt its production in South Africa

The woes continue to mount for American car manufacturer General Motors which has been forced to temporarily close its South African production plant because of striking metal workers in the country.

South Africa's National Union of Metalworkers (NUMSA) is striking country-wide over a pay dispute, meaning GM is short component parts for its vehicles.

A GM spokesperson told the BBC that the firm has the means to sustain production for two weeks.

The NUMSA is demanding that its union members see their wages hiked by 12%; workers are also looking for a housing allowance before they head back to work.

More than 200,000 members are involved in the strike, which employers say will cost the South African economy $28m a day in lost output. Apparently parties are close to reaching a settlement in the dispute.

Last year, the members were on strike for a month which cost automobile manufacturers almost $2bn in lost revenues.

GM has had a torrid 2014 thus far. Since the turn of the year, it has already had to recall more than 29 million vehicles – over three times the 9.7 million it sold in 2013.

The troubled car maker has suffered writedowns expected to total $2.5bn so far this year. The first-quarter included recall costs of $1.3bn.

Xi and Park Criticise Japan's Departure from Pacifist Doctrine

Chinese President Xi Jinping's South Korea visit

Chinese President Xi Jinping (L) and his South Korean counterpart Park Geun-hye attend the Korea China Investment Forum at a hotel in SeoulReuters

Chinese President Xi Jinping and his South Korean counterpart Park Geun-hye have expressed concern over Japan's recent reinterpretation of an article in the country's constitution that renounces war.

As the Chinese leader is on the last leg of a two-day visit to Seoul, the two countries criticised Japan's departure from its pacifist security doctrine.

Xi, while addressing college students at Seoul National University, said: "In the first half of the 20th century, Japanese militarists barbarously invaded China and Korea, swallowing up Korea and occupying half of the Chinese mainland."

"When the war between China and Japan reached its peak, the Chinese and Koreans helped each other, risking their lives."

Following bilateral talks between the two leaders, they were expected to make a joint statement against Japan, but that did not happen.

Earlier this week, Japan's ruling alliance led by Prime Minister Shinzo Abe ratified a new security policy that allows use of force to help allies who come under attack.

"[Park and Xi] agreed that it is worrying that Japan's attitude toward revising history continues as it even seeks to expand its right to self-defence. The two leaders also agreed that it is regrettable that Japan appears to be attempting to damage and play down the Kono Statement in practice even though it has said it will inherit it," said Ju Chul-ki, senior presidential secretary for foreign affairs.

Park and Xi also called for denuclearisation of the Korean Peninsula.

Noting that bilateral ties between China and South Korea have reached "an unprecedented level of strategic understanding", Park said: "Our two leaders share the view that we must realise North Korea's denuclearisation and resolutely oppose another nuclear test."

China Approves Lenovo and IBM's $2.3bn x86 Server Deal

China Approves Lenovo and IBM's $2.3bn Server Deal

Lenovo chief executive Yang Yuanqing.Reuters

The Chinese Ministry of Commerce's anti-monopoly bureau has approved Lenovo's proposed $2.3bn deal to acquire US technology giant IBM's low-end server business.

The deal, however, still requires US regulatory approval.

Lenovo's stock finished 0.19% lower in Hong Kong on 4 July.

The deal, announced in January 2014, is expected to be completed by the end of 2014, Lenovo chief executive Yang Yuanqing said earlier in the week.

Lenovo Group, the world's largest maker of personal computers agreed to buy IBM's low-end server business for $2.3bn (£1.3bn, €1.7bn) amid a slump in global PC shipments.

The purchase adds an additional revenue stream to Lenovo's shrinking PC business and will help the firm transform itself as a growing force in mobile devices and data storage servers.

Analysts have said that Lenovo will probably find it easier than IBM to sell the x86 servers to Chinese firms as Beijing attempts to localise its IT purchases following revelations about US global surveillance practices.

The sale helps IBM exit its low-margin x86 business and concentrate on its decade-long transition to the more profitable software and services business.

The x86 unit has annual revenues of about $4bn. The unit has reported seven consecutive quarters of declining revenue.

Regulatory Hurdle

In the US, the Committee on Foreign Investment reviews deals for national-security issues and is headed by Treasury Secretary Jacob J Lew.

The panel comprises the heads of several federal agencies including the departments of commerce, defence, homeland security, justice, state and the Office of the US Trade Representative.

Lenovo could lose some of IBM's traditional customers in the US, but any loss could be compensated by gains in its home market, Stephen Yang, a Hong Kong-based analyst at Sun Hung Kai Financial told Bloomberg in January 2014.

PC Shipments Bottom-Out

Worldwide PC shipments fell 10% in 2013, marking the worst yearly decline in the market's history - but there could be a light at the end of the tunnel, as analysts claimed the drop had "bottomed out," and that the market was expected to stabilise.

Shipments fell by 6.9% to 82.6 million units in the fourth-quarter of 2013, but analyst firm Gartner, which has been tracking the industry since the 1980s, said the worst could well be behind it.

Sisi Reforms Hike Egypt's Electricity Prices

Egypt President Abdel Fattah al-Sisi(Reuters)

Electricity prices in Egypt have been hiked as the new government embarked on its programme of subsidy reforms, according to the country's electricity minister Mohamed Shaker.

The average price for a kilowatt hour would rise from around 0.23 Egyptian pounds to around 0.51 pounds over a five year period, Shaker told the state news agency on Thursday.

Egypt's newly elected President Abdel Fattah al-Sisi is facing pressure to slash government spending as he attempts to improve the country's creditworthiness and reverse years of economic stagnation.

Egypt has been plagued by social and political turmoil since former president Hosni Mubarak was ousted in January 2011. Sisi, a former head of the armed forces, is the country's third president in four years.

Cairo spent around 144 billion Egyptian pounds ($20bn, £11.7bn, €14.8bn) on energy subsidies in the fiscal year ending on June 30, around a fifth of its overall budget, while electricity is currently sold at less than half its production cost.

Shaker said the reforms to electricity would allow the government to phase out the subsidy altogether in five years.

Meanwhile the country's Planning Minister Ashraf al-Arabi has warned Egyptians that petroleum products would see price rises shortly.

Speaking on Wednesday, Arabi said the price hikes would come "within days" although he did not give a specific date or amount.

Energy prices in Egypt are among the lowest in the world. Successive administrations have vowed to reduce the size of state subsidies but have recoiled from pushing through major reforms.