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UPDATE 1-Argentine bonds, stocks jump on hopes of deal with holdouts
June 18, 2014 / 8:30 PM / 3 years ago

UPDATE 1-Argentine bonds, stocks jump on hopes of deal with holdouts

(Adds country risk, analyst quotes)

BUENOS AIRES, June 18 (Reuters) - Argentine stocks and over-the-counter bonds rose on Wednesday, reversing losses after a lawyer representing the South American country in its bond dispute said it would negotiate for the first time with holdout investors next week.

Argentina’s country risk, as measured by the J.P. Morgan EMBI+ Index eased 53 basis points on hopes negotiations could end its long battle with the investors who refused to agree to its restructuring and help it avoid a new default.

The Merval stock index closed up 2.9 percent, while 2038 Par bonds closed up 7.2 percent.

Stocks and bonds had nosedived earlier in the session on news a U.S. court was lifting its stay on an order requiring Argentina to pay $1.33 to the hedge funds.

Argentina has vowed not to pay the holdouts but if it fails to do so or negotiate another solution, a U.S. court could bar it from servicing debt that it restructured in 2005 and 2010.

A lawyer for the country said at a New York court hearing on Wednesday Argentine officials had expressed a willingness to negotiate with holdouts to resolve the situation.

“This signal is crucial for trying to advance towards a negotiation and service the discount bond at the end of the month,” said Gustavo Ber, an analyst with consultancy Estudio Ber. “In the opposite case, authorities would have to quickly implement a local swap.”

Economy Minister Axel Kicillof had said on Tuesday the country was considering moving its restructured debt under U.S. legislation to local law so it could continue making payments without paying holdouts.

Some analysts said his comments seemed designed mainly to strengthen Argentina’s negotiating position. (Reporting by Jorge Otaola; Writing by Sarah Marsh; Editing by James Dalgleish and David Gregorio)

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