(Adds plans by bank to ask judge for guidance on payment
By Hugh Bronstein
BUENOS AIRES, July 2 Argentina will press a U.S.
judge to unfreeze a payment to holders of the country's
restructured debt as a condition for negotiating with a group of
New York hedge funds suing for full repayment, a government
official said on Wednesday.
Latin America's No. 3 economy has been pushed to the brink
of a new default by a string of U.S. court decisions that have
forced it to negotiate with "holdout" investors who declined to
restructure their bonds after the country's 2002 debt crisis.
More than 92 percent of the country's investors agreed to
receive less than 30 cents on the dollar in bond restructurings
carried out in 2005 and 2010.
The holdouts rebuffed those terms and want 100 cents on the
dollar, but say they are willing to negotiate.
The government is sending a team to New York next week to
set conditions for talks by way of a court-appointed mediator.
"These conditions will naturally include our objective of
honoring the restructuring of 92.4 percent of our debt and
generating fair conditions for all creditors," Cabinet Chief
Jorge Capitanich told a news conference. "We are going into the
meeting with this objective."
Argentina tried to make a coupon payment on its restructured
debt due on Monday but payout was blocked by U.S. District Court
Judge Thomas Griesa, who says the government must settle with
the holdouts before any more payments can be made on
The payment was in limbo after being deposited with transfer
agent Bank of New York Mellon but not paid out.
Griesa wants the $539 million deposit returned to
Argentina's accounts, but the government claims the cash now
belongs to holders of its restructured bonds.
Fearful of being sued by those investors but unwilling to
defy Griesa, a source close to the situation said the bank will
formally seek guidance from the judge by July 8.
Argentina has until the end of the month to settle with the
holdouts. If it fails, the country risks tumbling into its
second sovereign debt crisis in 12 years.
This would sap already thin central bank reserves and
prolong Argentina's banishment from the global bond market. The
country requires foreign financing to rebuild its grains export
infrastructure and develop its shale oil and gas sector.
Capitanich said Argentina needs to respect its two
restructurings as a basis for any deal with the holdouts, who
the government regularly denigrates as vulture funds circling
the remains of the country's 2002 debt crisis, which pushed
millions of middle-class Argentines into poverty.
Holdouts led by Elliott Management Corp are seeking $1.33
billion plus interest.
Economy Minster Axel Kicillof will go to the Organization of
American States on Thursday to look for international backing
as each side in the feud accuses the other of unwillingness to
negotiate in good faith.
"We are ready to meet with Minister Kicillof during his
visit to Washington, and to negotiate without preconditions,"
Elliott said in a statement.
(Additional reporting by Daniel Bases in New York; Editing by
James Dalgleish and Andrew Hay)