(Adds statement from U.S. court mediator)
By Krista Hughes
WASHINGTON, July 3 The United States on Thursday
urged Argentina to negotiate a solution with holdout investors
after a string of U.S. court decisions that have pushed the
country to the brink of default.
Argentina has until the end of July to settle with creditors
who refused to accept the terms of past bond restructurings.
If it fails, the country risks tumbling into its second
sovereign debt default in 12 years as it grapples with
recession, one of the world's highest inflation rates and
dwindling foreign reserves.
Roberta Jacobson, U.S. assistant secretary of state for
western hemisphere affairs, said it was in Argentina's interest
to normalize relations with all creditors and in the interests
of the country and the international community that Argentina
fully participate in the international financial system.
"Both sides of this dispute have said at different times
they would be willing to negotiate, which we believe offers the
parties the best path to a resolution," she said at a meeting of
the Organization of American States (OAS).
"We are hopeful that Argentina will find a solution to this
matter that resolves its issues with the bondholders and allows
it to return to inclusive growth."
Argentina's failure to pay about $100 billion of debt in
2001-2002 devastated the economy, crashed the currency, thrust
millions of middle-class Argentines into poverty and has shut
Latin America's No. 3 economy out of global markets.
Argentine Foreign Minister Hector Timerman said the country
was ready to negotiate with the holdouts, led by hedge funds
that specialize in buying deeply discounted or distressed debt
and negotiating profitable settlements, but on fair terms.
"We are not going to accept extortion and we are not going
to accept measures that go against the Argentine people," he
OAS member states passed a declaration backing Argentina,
but Jacobson said the United States could not support it as the
matter was before the courts.
Holdouts led by Elliott Management's NML Capital and
Aurelius Capital Management rejected terms offered in
restructurings in 2005 and 2010. These were accepted by more
than 90 percent of investors who received less than one-third
the original value of their bonds.
The holdouts want the full value, or $1.33 billion plus
interest, although they say they are willing to negotiate.
Argentina is sending a team to New York on July 7 to meet
with court-appointed mediator Daniel Pollack.
Economy Minister Axel Kicillof told a news conference the
composition of the team had not been decided and there was no
date set for meeting the holdouts.
Pollack had issued a statement earlier on Thursday saying
Argentina's lawyers had confirmed the delegation would include
government officials such as the secretary of finances. It is
not clear how much authority such officials, ranked below
Kicillof, will have to negotiate.
Jay Newman, senior portfolio manager at Elliott Management,
said in a statement it was time Argentina sat down with
creditors and negotiated the resolution of its debt.
(Reporting by Krista Hughes; Additional reporting by Sarah
Marsh and Nicolas Misculin in Buenos Aires; Editing by Leslie
Adler and Lisa Shumaker)