BUENOS AIRES, July 2 (Reuters) - Argentina will press a U.S. judge to unfreeze a coupon payment to holders of the country’s restructured debt as a condition of negotiating with ‘holdout’ creditors suing for full repayment, a government official said on Wednesday.
Latin America’s No. 3 economy has been pushed to the brink of a fresh 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 respecting 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 on Monday but payout was blocked by U.S. District Court Judge Thomas Griesa in New York, who said the government must reach a deal with holdouts before any more payments on restructured bonds can go through.
A 30-day grace period started on Tuesday, meaning the country has until the end of this month to strike a deal with the holdouts or fall into what would be its second sovereign default in 12 years.
A new default would prolong Argentina’s banishment from the global bond market, depriving it of the foreign investment needed to develop its promising Vaca Muerta shale oil and gas field in Patagonia and improve crumbling roads that have impeded the efficient export of soy, corn and wheat.
Without access to international capital markets, pressure is likely to continue on central bank reserves, which at about $29 billion are at eight-year lows.
Capitanich said Argentina will stress the need to respect its 2005 and 2010 restructurings as a basis for a 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.
“The restructuring ratified our willingness to pay our debts while allowing our economy to grow, and continue to generate resources to allow for payments to continue,” Capitanich said.
The holdouts, led by Elliott Management Corp and Aurelius Capital Management and who are asking for $1.33 billion plus accrued interest, accuse Argentina of recalcitrance.
“What they say is not true,” Capitanich said. “They are the ones who have never sat down at the negotiating table, and have emphatically and systematically rejected every possibility of doing so.” (Reporting by Hugh Bronstein; Editing by James Dalgleish)