Argentina says it has no team for talks in debt battle

BUENOS AIRES/NEW YORK Fri Jun 20, 2014 4:16pm EDT

The Economy Ministry building is seen in Buenos Aires June 18, 2014.  REUTERS/Enrique Marcarian

The Economy Ministry building is seen in Buenos Aires June 18, 2014.

Credit: Reuters/Enrique Marcarian

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BUENOS AIRES/NEW YORK (Reuters) - Argentina hasn't prepared a team to go to New York to negotiate with holdout bondholders, Cabinet chief Jorge Capitanich said on Thursday, casting doubt over whether it will seek a deal to stave off a debt default.

His remark appeared to contradict the government's lawyer, Carmine Boccuzzi of Cleary Gottlieb Steen & Hamilton, who said in federal court on Wednesday that Argentina would send officials to New York next week to seek negotiations with holdouts for the first time.

"There is no delegation prepared for a possible trip to the United States," Capitanich said in his morning briefing, although he also did not rule out negotiations.

A government source said later that Capitanich was referring to a lack of detail about who would travel and when, but that he wasn't saying talks wouldn't take place.

Argentina on Wednesday also said it couldn't afford to make its next bond payment, due June 30, if it had to pay the holdouts as well as the owners of its restructured bonds. Uncertainty about the government's strategy pushed Argentine stocks down about 3.5 percent in Thursday trading.

The 2nd U.S. Circuit Court of Appeals ruled on Wednesday that Argentina can't continue to pay creditors who agreed to restructure their bonds after its 2001-02 default on $100 billion in debt unless it also pays $1.33 billion to the holdouts demanding full payment.

President Cristina Fernandez's leftist government has until now refused to pay the holdouts and says the court rulings make it impossible to meet the next payment to holders of restructured debt.

Capitanich also referred to Economy Minister Axel Kicillof's remarks this week that Argentina was exploring ways to pay holders of its restructured bonds outside of U.S. law, an issue that was discussed yesterday in a hearing before U.S. District Judge Thomas Griesa in Manhattan.

"Therefore this (lifting of the stay) obviously changes the conditions from the point of view of paying, that's what generates the alternative conditions of paying under national law," Capitanich said.

Griesa said yesterday that adopting another payment mechanism of the kind proposed by the finance minister would violate the orders of his court.

Negotiations between the government and hedge funds leading the group of holdouts could resolve the crisis but the two sides appear to be far apart and Argentina is running out of time.

While the debt payment is due on June 30, the government has a grace period of 30 days before falling into default.

Fernandez has said she is open to negotiations while also accusing the holdouts of "extortion" and implying that her government might try to skirt the U.S. court rulings by bringing the debt under Argentine law.

The tough talk may be a bid to bolster Argentina's power at the negotiation table but it risks further angering Griesa, who has ruled consistently in favor of the holdouts and criticized Fernandez's public comments.

The holdout creditors are led by NML Capital Ltd., a division of billionaire Paul Singer's Elliott Management Corp., and Aurelius Capital Management, chaired by Mark Brodsky.

"Argentina's lawyer has informed the court that unidentified government officials will come to New York on an unidentified day next week to discuss settlement after years of rebuffing settlement overtures," Brodsky said in a statement on Wednesday. "I have learned not to rely on any assurance Argentina's counsel provide to our courts. I expect a charade, but I hope to be proven wrong."

Spokesmen for NML and Aurelius on Thursday declined further comment about whether prospective talks were in the works.

(Reporting by Buenos Aires newsroom; Additional reporting by Nate Raymond and Alison Frankel in New York; Writing by Alexandra Ulmer; Editing by Kieran Murray and John Pickering)

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Comments (1)
Reuters1945 wrote:
Those who invest billions of dollars purchasing Bonds issued by non “Tier 1″ nations do not do so out of feelings of altruism.

Such investors hope to reap millions of dollars in interest payments.

However it does not require a rocket scientist to understand that lending astronomical amounts of money to shaky governments also involves accepting astronomical degrees of risk.

Those who practically begged Bernie Madoff, (now serving a life sentence in jail), on hands and knees, to take and handle countless millions of dollars of their savings were lured by the oldest trait in the world- unmitigated greed.

The lure of clearly too good to be true huge interest rates made it easy to ignore the cold reality that when something seems too good to be true, it often is not true.

Winners are often prone to brag how “smart” they are but losers often like to pretend they were misled and/or even the hapless victims of intentional fraud and/or conspiracy perpetrated by others.

There is an old saying originating from the back room betting parlors of a by-gone era:

“You ‘bets’ your money and you ‘takes’ your chances”.

If you want to feel any sympathy for anyone, save that sympathy for those who deserve it.

Jun 20, 2014 5:01pm EDT  --  Report as abuse
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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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