BUENOS AIRES/NEW YORK: Argentina will meet the United States mediator in its battle with “holdout” debt investors suing the country for last-minute talks to avert a second default this century, but hopes for a deal are fading fast.
Mediator Daniel Pollack said on Monday the Argentine government advised him it was sending a delegation of technical, financial and legal representatives to meet him at 11am EDT (1500 GMT) yesterday in his office in New York.
However, Argentine government sources said Economy Minister Axel Kicillof, the country’s chief dealmaker, who has brokered deals with foreign creditors and investors this year, will be in Caracas, attending a meeting of the South American trade bloc Mercosur.
“I again urged direct, face-to-face conversations with the bondholders, but that will not happen today,” Pollack said, referring to the holdout creditors.
Argentine dollar-denominated bonds closed down as much as 3.3 per cent in over-the-counter trading on Monday, as investors worried about today’s deadline for Latin America’s No. 3 economy to either pay the New York hedge funds in full or cut a deal to stave off a default.
Argentina’s isolation from global capital markets means an eventual default would be highly unlikely to send shockwaves through emerging markets worldwide. But it will hurt a domestic economy already in recession and battling soaring inflation.
Negotiations have made scant progress in the past three weeks. If the deadlock persists, US district judge Thomas Griesa will prevent Argentina from making deadline for a coupon payment on exchanged bonds, triggering a new default.
Argentina argues it cannot cut a deal now that risks breaking a clause barring the country from offering better terms to investors than those in the bond swaps that were accepted by 92.4 per cent of its creditors in 2005 and 2010.
A group of those “exchange bondholders” has offered to waive the so-called RUFO clause, the Financial Times reported on Monday, citing unnamed sources.
The FT reported that holders of more than US$4 billion (RM12.7 billion) of Argentina’s discount and par eurobonds sent a letter to Pollack offering to speed the settlement talks. Pollack did not respond to requests for comment. Reuters