(Adds details of Bank of New York Mellon filing a motion)
By Walter Bianchi
BUENOS AIRES, July 10 Argentina said a team of
technocrats, and not its economy minister, would attend a
meeting in New York with a court-appointed mediator on Friday,
as it seeks to resolve a dispute with holdout investors over its
Argentina needs to seal a deal before a July 30 deadline
with investors who rejected its debt restructurings after its
catastrophic 2002 default on $100 billion. Growing optimism it
will reach one sent its bonds higher on Thursday.
Without a deal, Latin America's No. 3 economy risks tumbling
into a new default as it battles a recession, one of the world's
highest inflation rates and dwindling foreign reserves.
"The mission that will meet with the special master Daniel
Pollack in New York will be carried out by the juridical and
financial team of the economy ministry and other areas of the
government," Argentine Cabinet Chief Jorge Capitanich told
reporters at his daily briefing.
He said Economy Minister Axel Kicillof will not participate.
U.S. District Judge Thomas Griesa has ruled Argentina must
immediately pay the group of holdouts, led by hedge funds
Elliott Management Corp and Aurelius Capital Management, the
bonds' full value worth $1.33 billion plus accrued interest.
Griesa's ruling also ordered Argentina not to pay out to
other investors who accepted large writedowns on their debt
holdings until it had settled with the holdouts. More than 92
percent of investors agreed to receive less than 30 cents on the
dollar in restructurings carried out in 2005 and 2010.
When Argentina in late June deposited a coupon payment
worth about $539 million with the government's transfer agent,
Bank of New York Mellon (BONY), Griesa blocked any onward
Since then the bank has faced competing demands: from
Griesa's court order, from investors who want their interest
payment and from Argentina, which says the money no longer
belongs to it.
On Thursday, BONY said Euro bondholders had threatened to
sue the bank if it returned the funds to Argentina.
"(The bank) seeks clarification that it may comply with this
Court's Injunctions by retaining the funds received from
Argentina in the Banco Central Accounts where they are presently
held," BONY wrote in the opening statement of the motion.
Argentina says paying the hedge funds in full could prompt
claims totalling more than $100 billion. The country now has
just $29.5 billion in reserves.
For years, Argentina has refused to negotiate with the
holdouts, portraying them as "vultures" circling the corpse of
its 2002 default that plunged millions of Argentines into
poverty, and buying bonds in the secondary market at a steep
But faced with the spectre of default, it now says it is
willing to talk, and wants to complete a deal with all of its
creditors, including other holdouts and the investors who
accepted the tough terms of its 2005 and 2010 debt swaps.
Creeping optimism that Argentina will reach a deal sent
benchmark Discount bonds up 5.7 percent to 93.50
on the local over-the-counter market earlier on Thursday, while
Par bonds rose 8.10 percent to 53.40.
Griesa appointed Pollack to find common ground in the
years-long battle that has delayed Argentina's return to
international capital markets since its 2002 banishment.
Kicillof, who has settled disputes with the Paris Club of
creditor nations and Spain's Repsol in recent months in an
attempt to regain the trust of foreign investors, spent four
hours on Monday discussing the case with Pollack.
If Argentina does not complete a deal, Judge Griesa has said
he will continue blocking it from making a coupon payment on its
restructured bonds that was already due on June 30. A 30-day
grace period ends July 30.
(Additional reporting by Sarah Marsh, Nessi Hernan and Richard
Lough; Editing by W Simon, J Benkoe and Ken Wills)