| NEW YORK, July 24
NEW YORK, July 24 Representatives for holdout
investors and Argentina in the country's ongoing debt default
met for about three hours with a court-appointed mediator in New
York on Thursday, less than a week before Argentina could once
Several members of Argentina's delegation left the Manhattan
office of special appointee Daniel Pollack around 3:30 p.m. EDT
(1930 GMT) but declined to comment on the talks. Edward
Friedman, a lawyer for Aurelius Capital Management, one of two
leading holdouts, emerged shortly after, also without
Argentina faces its second default in 12 years if it fails
to cut a deal with the hedge funds demanding full payment,
instead of a reduced amount, for defaulted bonds. In 2002 the
country, facing dire economic conditions, defaulted on
approximately $100 billion of sovereign debt.
The two sides were ordered by U.S. District Judge Thomas
Griesa to meet with Pollack until a resolution is reached.
Without a settlement, or Argentina electing to pay the holdout
hedge funds a court-ordered $1.33 billion plus accrued interest,
Argentina could be in default.
Earlier in the day, Argentina's La Nacion newspaper reported
that one of two lead holdouts in the case, NML Capital Ltd, a
division of Elliott Management Corp, could call for Griesa to
temporarily suspend, or stay, his order that Argentina pay
holdout creditors. Argentina says the order is pushing it toward
However Mark Brodsky, chairman of Aurelius Capital
Management, said in a statement that "the story is utter
Argentina was ordered to pay the holdouts at the same time
it paid bondholders who accepted an exchange, or restructuring,
of defaulted debt in 2005 and 2010.
In the wake of La Nacion's story, investors bid Argentine
debt prices higher and narrowed the yield spread over benchmark
Yields on restructured Argentine debt, such as the 2038 Par
bonds, traded up 1.068 points in price in
mid-morning New York trade, according to Reuters data. The price
rose sharply on La Nacion's story, but then fell back once
Brodsky's statement was reported. The bond is yielding 8.38
percent at a bid price of 52.865.
"Absolutely Brodsky moved the market. The official denial
from the holdouts clearly had an impact on market pricing as
this is a much more credible source than the rumors reported in
the local press," said Siobhan Morden, head of Latin America
strategy at Jefferies in New York.
Earlier, Argentina's Cabinet Chief Jorge Capitanich said the
country was not holding negotiations behind the scenes with the
Argentina, Latin America's No. 3 economy, argues paying the
holdouts would break a legal clause protecting creditors who
accepted large writedowns after its 2002 default and open it up
to claims worth as much as $15 billion.
Griesa's injunction, which blocks payment, has stopped
Argentina from transferring a June 30 coupon payment to exchange
bondholders. That triggered a 30-day grace period that ends on
(Additional reporting by Alejandro Lifschitz and Sarah Marsh in
Buenos Aires; Editing by David Gaffen and Chizu Nomiyama)