Holdout investors tell Argentina: 'Time is running out' for deal

BUENOS AIRES (Reuters) - Argentina is running out of time to broker a debt deal and avoid another painful default, “holdout” investors suing the country for full repayment on their bond holdings said on Wednesday.

The Economy Ministry building is seen in Buenos Aires June 18, 2014. REUTERS/Enrique Marcarian

Latin America’s No. 3 economy has just two weeks to cut a deal with the holdouts, but a government source told Reuters on Tuesday there would be no face-to-face talks with a court-appointed mediator this week, raising questions over Argentina’s commitment to reaching an agreement. [ID:nL2N0PQ0HA]

The holdouts spurned the terms of Argentina’s restructurings following a $100 billion default in 2002. The country has until July 30 to reach a deal with the funds or face default.

“Time is running out for Argentina,” read a full-page advertisement in Argentina’s El Cronista daily, by a U.S. lobby group working for the New York-based hedge funds. “It is time for Argentina to demand that its leaders behave in a serious and responsible manner to save this country from default.” Addressing leaders of the so-called emerging BRICS economies in Brazil, President Cristina Fernandez said Argentina had, and would continue, to honor its debt obligations to investors who took part in the 2005 and 2010 debt swaps.

But she reiterated that Argentina could not meet a U.S. court order demanding full payment to the holdouts because of a legal clause prohibiting Buenos Aires from offering better terms than those given to investors who accepted large writedowns.

“It is impossible to fulfill what they want,” Fernandez said, standing firm on the government line.


Argentina says it would face claims from other holdouts and bondholders worth more than $100 billion if did break the so-called RUFO clause.

For years Argentina shunned talks with the holdouts, that it portrayed as “vultures” picking on the bones of its default.

But the government has exhausted its legal options to get around a 2012 ruling by U.S. District Judge Thomas Griesa that it pay holdouts $1.33 billion, plus accrued interest.

A shrinking economy and dwindling foreign reserves have increased pressure on Fernandez to negotiate, though she and her ministers have kept up their frothy, nationalistic rhetoric.

“We need to put an end to this sort of international looting of finances, as they are doing today with Argentina,” Fernandez told supporters ahead of addressing the summit.

Griesa ruled Argentina could not service its restructured debt until it settled with the “holdouts” and blocked a June 30 interest payment, leaving the funds in limbo and triggering a 30-day grace period.

The Bank of New York Mellon has filed a motion seeking clarity over what it should do with the blocked payment.

Griesa said in New York on Wednesday said he would hear arguments on July 22 related to the banks and payment agents caught up in the Argentine sovereign debt case.

The hedge funds involved in the case, led by Elliott Management Corp and Aurelius Capital Management, say they are willing to accept bonds as part of a deal.

Additional reporting by Alejandro Lifschitz; Editing by Dan Grebler and Sarah Marsh