UPDATE 1-Talks between Argentina holdouts and banks stall -sources

Tue Aug 12, 2014 1:14pm EDT

(Adds quotes, detail)

By Joan Magee

NEW YORK, Aug 12 (IFR) - Argentina's holdout creditors and international banks are struggling to strike a deal on the sovereign's debt, sources close to the situation said on Tuesday.

Citi, Deutsche Bank, HSBC and JP Morgan last week offered the holdouts 40 cents on the dollar for the roughly US$1.66bn bonds, including interest, they own, and raised that offer to 50 cents on Monday, the sources said.

But that is way below the 80 cents that was first discussed by banks last week.

"These are not fully-baked proposals," said a source from one of the holdout firms - hedge funds led by Aurelius Capital and NML Capital.

"Right now, any and all deal talks are completely dead, because the bitter public rhetoric of the Argentine government has killed any such interest on the part of third parties," the source added, referring to media coverage of Argentina's default on July 30, its second in 13 years.

"Nobody trusts that Argentina has any interest in a resolution in any reasonable time frame," the source said.

Argentine bonds dipped 25 cents on average from earlier this morning, traders in New York said.

Argentina's Boden 2015s were trading at 96.95 mid-market, while Discount 2033s were spotted at 85.50 mid-market. Bonar 2017s were trading at 92.05 and the Bonar 2024s were at 92.70.

OTHER OPTIONS?

Local press have reported that Argentine billionaire Eduardo Eurnekian may be putting together an industrial group to buy the holdout debt, but the source denied Eurnekian had contacted them with any form of a deal.

Another source at the holdout creditors said they would be more open to a hybrid of Paris Club and Repsol deals.

In May, Spain's Repsol received US$6bn in bonds as compensation for the 2012 expropriation of its 51% stake in Argentina's YPF. That same month, the government said it would pay US$9.7bn in arrears to its Paris Club of creditors over the course of five years.

"This likely doesn't have to cost Argentina much, if any, cash," said the second source. "Bonds can be a major part of the deal."

The Argentine government has clung to the idea that the so-called RUFO clause, which expires in January, impedes it from offering better terms to the holdout investors. Such a move would trigger the RUFO clause and expose it to billions of dollars worth of claims.

Such a move would trigger the RUFO clause and expose it to billions of dollars worth of claims, the government says.

Talks between the banks and the holdouts have been going on for the past two weeks.

Sources close to the banks say talks are still ongoing.

Citigroup, Deutsche Bank and JP Morgan declined to comment, while HSBC did not respond to requests for comment. (Reporting by Joan Magee; Additional reporting by Davide Scigliuzzo; Editing by Paul Kilby and Natalie Harrison)

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Comments (2)
GermanHoldout wrote:
If buyback by the banks, then please extended TO ALL HOLDOUTS!!!!

Already a buyback offer of 80% WOULD NOT BE ACCEPTABLE for the Holdouts! (40% is ridiculous) 80% would be worth of about the Exchange offers from 2005 and 2010 until today, which has been already rejected twice by the holdouts

A BUYBACK OFFER OF ABOUT 150-170% could be acceptable for the Holdouts.

Argentina owes to today about 230% to the Holdouts (capital + accrued interest since 2002)

A cash buyback of about 150-170% would give Argentina a debt relief of about 60-80%.

IN PRACTICE, FOLLOWING COULD BE THE SOLUTION TO FINISH ARGENTINA’S SINCE 2002 ONGOING NIGHTMARE DEFAULT.

ARGENTINA SHOULD GIVE A SIGN, A PROMISE TO JUDGE GRIESA / MEDIATOR POLLACK AND THE HOLDOUTS, THAT IT WILL NEGOTIATE IN GOOD FAITH AND IT WILL FULFILL THE COURT ORDER (EXTENDED TO ALL HOLDOUTS) AND REPAY THE DEBT TO THE HOLDOUTS, AFTER THE RUFO CLAUSE EXPIRES IN DECEMBER 2014.

THEN THE HOLDOUTS WOULD SURELY ASK JUDGE GRIESA TO REINSTALL THE “STAY” UNTIL JANUARY 1, 2015.

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 had not repaid a cent 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.

Aug 12, 2014 4:16pm EDT  --  Report as abuse
GermanHoldout wrote:
If buyback by the banks, then please extended TO ALL HOLDOUTS!!!!

Already a buyback offer of 80% WOULD NOT BE ACCEPTABLE for the Holdouts! (40% is ridiculous) 80% would be worth of about the Exchange offers from 2005 and 2010 until today, which has been already rejected twice by the holdouts

A BUYBACK OFFER OF ABOUT 150-170% could be acceptable for the Holdouts.

Argentina owes to today about 230% to the Holdouts (capital + accrued interest since 2002)

A cash buyback of about 150-170% would give Argentina a debt relief of about 60-80%.

IN PRACTICE, FOLLOWING COULD BE THE SOLUTION TO FINISH ARGENTINA’S SINCE 2002 ONGOING NIGHTMARE DEFAULT.

ARGENTINA SHOULD GIVE A SIGN, A PROMISE TO JUDGE GRIESA / MEDIATOR POLLACK AND THE HOLDOUTS, THAT IT WILL NEGOTIATE IN GOOD FAITH AND IT WILL FULFILL THE COURT ORDER (EXTENDED TO ALL HOLDOUTS) AND REPAY THE DEBT TO THE HOLDOUTS, AFTER THE RUFO CLAUSE EXPIRES IN DECEMBER 2014.

THEN THE HOLDOUTS WOULD SURELY ASK JUDGE GRIESA TO REINSTALL THE “STAY” UNTIL JANUARY 1, 2015.

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 had not repaid a cent 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.

Aug 12, 2014 4:17pm EDT  --  Report as abuse
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