(Adds vote results, auction)
By Davide Scigliuzzo
NEW YORK, Aug 1 (IFR) - The International Swaps and
Derivatives Association (ISDA) on Friday declared Argentina in
default, which could trigger payments worth up to USD1bn on
credit default swaps.
ISDA's determinations committee voted unanimously that a
"failure to pay" event occurred on July 30, when Argentina
missed a coupon payment on some restructured foreign-law bonds.
The ISDA committee will now hold an auction to settle the
outstanding CDS transactions.
Argentine bonds extended losses in the immediate aftermath
of the decision.
"Generally bonds are lower by 1 to 2 points," one New
York-based trader said. "Things got hit further."
Argentina's Discount 2033s denominated in US dollars and
euros traded at cash prices as low as 86 and 81 respectively
after ISDA's announcement, he said.
A trader in Miami said some accounts took a bet on the
Argentine-law bonds, sending them marginally higher, but that
overall volumes remain well below previous sessions.
"I saw some buyers of the Boden 2015s, but I think that's
too risky as I don't see a solution in the short term," the
trader said. "The situation in getting more complicated day by
CDS reaction was muted as market participants wait for
ISDA's auction process to start and accounts remain hesitant to
"All prices disappeared," said the trader. "But it is a
small market, so there won't be much movement."
The net notional outstanding on Argentina's CDS contracts is
just over US$1bn after accounting for offsetting trades,
according to data form the Depository Trust & Clearing
(Reporting by Davide Scigliuzzo; Editing by Marc Carnegie)