June 16, 2014 / 2:25 PM / 3 years ago

Argentina bonds plunge on US Supreme Court decision

NEW YORK, June 16 (IFR) - Argentina bonds plunged 8 points Monday after the US Supreme Court declined to hear the country’s appeal against holdout creditors who refused to take a haircut on their bond holdings.

The repricing could get many times worse as Argentina has warned it could default if forced to make the full payment to those creditors.

The country’s 2033 discount notes, governed by New York law, were quoted at 74.5-78.0 around 10am, down from 84 mid-market before the court’s decision was announced, according to one trader.

“They have a very short time to negotiate,” said Klaus Spielkamp, a trader at Bulltick in Miami. “Otherwise it will be a technical default.”

Argentina’s Boden 2015s, governed by local law and therefore not directly hit by the decision, were also down by around 3/4 of a point to an offer price of 97 and no bid, traders said.

“This is really a question on NY law bonds,” said Siobhan Morden, head of Latin America strategy at Jefferies. “The local bonds are not immune, but they are not as gappy as the international bonds.”

Morden said the discount sovereigns could trade down by as much as 25 points before finding buyers, while local-law bonds could lose 2-3 points. (Reporting by Davide Scigliuzzo; Editing by Marc Carnegie)

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