(Adds drop in bond prices, details on failed deal talks,
analyst, hunt for Argentine money in Nevada)
By Hugh Bronstein and Davide Scigliuzzo
BUENOS AIRES Aug 14 Argentina branded the hedge
funds suing the country over their debt holdings an
"international mafia" on Thursday after talks to bring a swift
end to its latest default collapsed and sent Argentine bond
A group of international banks had appeared to be nearing a
deal to buy a chunk of the debt held by holdout creditors whose
legal battle against Argentina tipped Latin America's No. 3
economy into default on July 31.
But holdout fund Aurelius Capital Ltd said on Wednesday
there was "no realistic prospect" of a private solution, dealing
a heft blow to market optimism Argentina's second default in
little over a decade could be swiftly cured.
Argentine bonds extended losses in local over-the-counter
trading. The dollar-denominated Par bond slumped 4
percent to a bid price of 48.4, while the dollar-denominated
Discount bond shed 1.7 percent to end at 82.55.
"Today we are in the hands of an international financial
power comprised of small, voracious interests that form a real
international mafia," Argentine Cabinet Chief Jorge Capitanich,
Although Argentine bond prices remained way off prices
typical of distressed debt, the sharp falls pointed to fading
confidence on Wall Street of a quick end to the country's latest
Talks between Citigroup, Deutsche Bank,
HSBC and JP Morgan appeared to collapse over
disagreements over the price the banks would pay and the absence
of a guarantee from the government it would honor payments on
them, sources told Thomson Reuters IFR.
IFR also reported that owning just $25 million of bonds may
be enough to trigger a demand for the accelerated payment of
restructured bonds worth up to $30 billion.
Creditors representing 25 percent of a bond series' nominal
value can demand the principal value and interest on a bond
series be immediately due, a move known as acceleration.
The dollar-denominated Par series maturing in 2038, on which
the sovereign has just $95.3m outstanding, has been the focus of
investor attention, IFR said.
Daniel Kerner, director of Latin America and Eurasia Group,
said the acceleration scenario was "looking increasingly
Argentina's peso fell 0.5 percent on Thursday to hit a new
all-time low of 13.17 per dollar on the informal market, known
as the Blue. Tight capital controls mean Argentines are often
forced to resort to the black market when they cannot get hold
of greenbacks through official channels.
The country's latest debt crisis stems from its default on
nearly $100 billion in sovereign bonds 12 years ago and is
blocking its return to the international bond market.
Holdout funds led NML Capital Ltd and Aurelius bought
Argentine bonds at a discount between 2001-2008 and have pressed
their demand for payment of 100 cents on the dollar.
The lead attorney for NML, Robert Cohen, said on Thursday
the firm could begin scouring the Nevada desert for Argentine
money, after a Nevada court on Aug. 11 compelled representatives
of 123 companies registered in the state to comply with NML's
Cohen said the shell companies were allegedly hiding $65
million in embezzled Argentine assets and were "just the tip of
a very large iceberg".
He said NML is owed just under $3 billion by Argentina when
taking into account all of the cases it has won against the
Latin American nation in the U.S. courts stemming from the 2002
There was no immediate reaction from the Argentine
(Additional reporting by Walter Bianchi and Richard Lough in
Buenos Aires and Joan Magee of Thomson Reuters IFR and Daniel
Bases in New York; Writing by Richard Lough; Editing by Bernard