Argentina will not make holdouts offer on Monday - paper

BUENOS AIRES, July 5 Sat Jul 5, 2014 10:40am EDT

BUENOS AIRES, July 5 (Reuters) - Argentina will not make a formal offer to settle its dispute with holdout investors in its sovereign debt at its meeting on Monday with a court-appointed mediator, an Argentine daily wrote on Saturday, citing Economy Ministry sources.

After a string of adverse U.S. court decisions, Argentina has until the end of July to settle with a group of creditors who refused to accept the terms of its restructurings following its 2002 default on $100 billion of debt.

The government regularly denigrates them as vulture funds circling the remains of the country's debt crisis, which pushed millions of middle-class Argentines into poverty.

But if it fails to seal a deal with them, Argentina risks tumbling into a fresh sovereign debt default at the same time as it grapples with recession, one of the world's highest inflation rates and dwindling foreign reserves.

The newspaper Pagina/12 wrote that Argentina's mission to meet with mediator Daniel Pollack in New York wanted to check if the holdouts would simply insist on being immediately paid the full value of their bonds, namely $1.33 billion plus accrued interest, as ordered by U.S. District Court Judge Thomas Griesa.

"We are going to listen to the mediator and we want to know if there is the possibility of a genuine negotiation or if the vultures expect the ruling to be carried out as it was dictated by Griesa," an Economy Ministry source told Pagina/12.

The paper added that Argentina wanted to ask the mediator if there was a possibility of negotiating a deal to settle the claims of all holdouts, while ensuring it was not exposed to fresh lawsuits from the creditors who accepted the tough terms of its debt swaps in 2005 and 2010.

Argentina has previously said it cannot voluntarily offer better terms for a restructuring with holdouts because of a clause that expires on Dec. 31 designed to stop anyone getting a better deal than bondholders who had already settled.

More than 92 percent of Argentina's investors received less than one-third the original value of their bonds.

Pagina/12 said the ministry had not excluded the possibility that Economy Minister Axel Kicillof, who has sealed many deals with foreign investors and creditors in recent months, could lead the delegation on Monday.

Pollack issued a statement on Thursday saying Argentina's lawyers had confirmed its delegation would include government officials ranked below Kicillof such as the secretary of finances.

Hours later, however, Kicillof told a news conference the composition of the team had not been decided. (Reporting by Sarah Marsh and Maximilian Heath)

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Comments (3)
AbrahamA wrote:
Argentina had in past been ordered to pay the holdouts the full principal and interest but they had used delaying tactics to avoid making such payments. So what makes you think that Argentina will honor the ruling this time around.

Just as Argentina has done in past with the two swaps of 2005 and 2010, all they would offer to the two US hedge funds is the option to accept new debt whose market value would be no different than what the Hedge funds paid in the first place.

Jul 05, 2014 12:41pm EDT  --  Report as abuse
GermanHoldout wrote:
FOLLOWING COULD BE THE SOLUTION TO END ARGENTINA’S NIGHTMARE DEFAULT

Under the review of Judge Griesa and Daniel Pollack, Argentina and the Holdouts come together, to end this HORROR-Default, with endless suffering for tens of thousand holdout creditors and their families worldwide.

THE PROCESS COULD BE FOLLOWING:

The “RUFO” clause (Rights Upon Future Offers) expires as of December 2014. That means, that from 01/01/2015 Argentina can make a better offer to the Holdouts, than it made in 2005 and 2010.

Argentina and the holdouts make NOW A BINDING AGREEMENT with respect to the “time after” (end of the “Rights Upon Future Offers (RUFO) clause in December 2014), seizure risks and a technical Default would be immediately averted. Argentina could immediately return to the capital market and thus Argentina could refinance the payments to the holdouts, without using reserves.

In practice the negotiations between Argentina and the Holdouts could look like this:

Argentina enters into good-faith negotiations with the holdout creditors – all of them –via the offices of NML Capital. A firm deadline should be set to reach an agreement, say January 2, 2015, two days after the expiration date of the Rights Upon Future Offers clause.

HOW COULD BE THE CONDITIONS FOR THE REPAYMENT?

Argentina owes to today about 230% to the Holdouts (since 2002 Argentina has not repaid anything to the holdouts)

- at the latest, on 02/01/2015 (end of RUFO clause) Argentina would repay in CASH 100% of the nominal value of the defaulted bonds, which became due before 2015.

- For the accrued interest between 2002-2015 (until now about 130%), Argentina would emit new bonds with a maturity of 5-7 years.

Jul 05, 2014 2:04pm EDT  --  Report as abuse
GermanHoldout wrote:
FOLLOWING COULD BE THE SOLUTION TO END ARGENTINA’S NIGHTMARE DEFAULT

Under the review of Judge Griesa and Daniel Pollack, Argentina and the Holdouts come together, to end this HORROR-Default, with endless suffering for tens of thousand holdout creditors and their families worldwide.

THE PROCESS COULD BE FOLLOWING:

The “RUFO” clause (Rights Upon Future Offers) expires as of December 2014. That means, that from 01/01/2015 Argentina can make a better offer to the Holdouts, than it made in 2005 and 2010.

Argentina and the holdouts make NOW A BINDING AGREEMENT with respect to the “time after” (end of the “Rights Upon Future Offers (RUFO) clause in December 2014), seizure risks and a technical Default would be immediately averted. Argentina could immediately return to the capital market and thus Argentina could refinance the payments to the holdouts, without using reserves.

In practice the negotiations between Argentina and the Holdouts could look like this:

Argentina enters into good-faith negotiations with the holdout creditors – all of them –via the offices of NML Capital. A firm deadline should be set to reach an agreement, say January 2, 2015, two days after the expiration date of the Rights Upon Future Offers clause.

HOW COULD BE THE CONDITIONS FOR THE REPAYMENT?

Argentina owes to today about 230% to the Holdouts (since 2002 Argentina has not repaid anything to the holdouts)

- at the latest, on 02/01/2015 (end of RUFO clause) Argentina would repay in CASH 100% of the nominal value of the defaulted bonds, which became due before 2015.

- For the accrued interest between 2002-2015 (until now about 130%), Argentina would emit new bonds with a maturity of 5-7 years.

Jul 05, 2014 2:04pm EDT  --  Report as abuse
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