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UPDATE 2-Argentine president says debt stance not made on a whim
July 23, 2014 / 3:42 PM / 3 years ago

UPDATE 2-Argentine president says debt stance not made on a whim

(Recasts with Argentine president’s statement)

By Nate Raymond and Richard Lough

NEW YORK/BUENOS AIRES, July 23 (Reuters) - Argentina will keep talking to “holdout” investors suing the country for full payment on their bonds, but its demands should not be trivialized as whims, its president said on Wednesday.

President Cristina Fernandez said Argentine officials would travel as often as necessary to New York, where negotiations aimed at staving off another painful debt default are being held through a court-appointed mediator.

The latest round of debt talks between the two sides was pushed back by a day on Wednesday, mediator Daniel Pollack said, as the clock ticked down toward a July 30 deadline for a deal.

“We’ll keep talking,” Fernandez told workers at a new factory outside the capital, Buenos Aires. “We’ll go as often as necessary to wherever we need to go. But our demands, they are not just a whim.”

Argentina faces its second default in 12 years if it fails to cut a deal with the hedge funds demanding full payment for defaulted bonds, instead of a reduced amount.

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.

New York lawyer Pollack said the Argentine delegation “could not get here in time” after U.S. District Judge Thomas Griesa on Tuesday ordered both sides meet “continuously” until they reached an agreement.

Pollack said the meeting had been rescheduled for Thursday at 12 p.m. EDT (1600 GMT).

Argentina, which defaulted on about $100 billion in 2002, has been pushed to the brink of a fresh default by U.S. court decisions that it pay the $1.33 billion face value of the bonds plus interest to bondholders who did not participate in debt swaps in 2005 and 2010.

Bondholders who agreed to the restructuring terms received large writedowns.

Fernandez’s unflinching stance in the battle against “holdout” investors suing the country may increase the odds that her government will default.

The possibility of a default came after Argentina last month made what the ministry said was a $1.15 billion payment for its restructured bondholders. That money included $539 million deposited with indentured trustee Bank of New York Mellon Corp.

But Griesa deemed the payment a violation of injunctions that required Argentina to pay the holdouts the $1.33 billion the next time it paid the restructured bondholders.

The judge blocked transferring the funds to creditors, triggering a 30-day grace period up to July 30.

The holdouts are led by Elliott Management’s NML Capital Ltd and Aurelius Capital Management.

Griesa on Tuesday called the possibility of default “the worst thing I can envision” and said the two sides still had enough time to work out a deal. (Editing by Jeffrey Benkoe, W Simon and Lisa Shumaker)

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