Lawyers representing the holdout investors, led by Elliott
Management's NML Capital Ltd and Aurelius Capital Management, also
said in a letter to U.S. District Judge Thomas Griesa there were no
grounds to grant Argentina's request to reinstate a suspension of
his order to make payment.
A bond payment of $900 million is due Monday to investors who
participated in two prior restructurings on the same terms in 2005
and 2010. There is a 30-day grace period before an actual default
can be declared if there is no payment.
"If as July 30 approaches the parties have made good progress but
more time is needed, and Argentina has not taken action to evade the
Amended February 23 orders, Argentina and the Plaintiffs will both
have a strong motivation to work out a consensual accommodation, on
mutually agreeable terms," Robert Cohen of Dechert, lead counsel to
the holdouts, said in the letter to Griesa.
Cohen went on to say this would allow the settlement process to
continue, allow Argentina to make the payment to exchange
bondholders within the grace period and give his clients protections
and compensation for the risk that the settlement effort fails after
Argentina makes its payment.
On Monday, Griesa appointed New York financial trial lawyer Daniel
Pollack as a special master to assist in the negotiations.
Pollack would not respond directly when asked whether a meeting with
Argentine Economy Minister Axel Kicillof was scheduled, saying: “I
am making every effort to assist the parties to reach a resolution
of their litigation as rapidly as possible. The issues are complex
and very significant for all parties.” A source familiar with the
situation said Pollack has already begun the process.
"There was a meeting today with both sides' lawyers and Pollack, but
it was strictly a get to know you gathering rather than a
substantive discussion on the issues," the source said.
Kicillof is due to speak at the United Nations in New York on
Wednesday about the debt situation, Argentina's U.N. Ambassador
Maria Cristina Perceval told Reuters. Kicillof will also meet with
lawyers for the Argentine government while in New York, a government
source in Buenos Aries told Reuters, but it is unclear if he will
also meet with holdout investors or Pollack.
"Argentina's officials have yet to engage in any way with the
principals of its creditors, or even take steps to schedule such a
meeting," the letter from Dechert said.
Argentina's lawyers on Monday asked Griesa to suspend his order,
which would force the nation to either pay holdouts at the same time
it makes a payment on restructured debt or be barred from paying
anyone - thereby creating a technical default even though the
country has the cash to cover its debt.
According to the Dechert letter, Judge Griesa held a conference call
with the lawyers from both sides to discuss Argentina's request to
suspend, or stay, his order.
Griesa's order was upheld after the U.S. Supreme Court on June 16
denied the government's request to hear an appeal on the injunction
put on financial institutions from transferring payments by the
government through the U.S. banking system.
[to top of second column]
The plaintiffs, who have waged battle with Argentina in the New York
courts, won a 2012 judgment for $1.33 billion. They claim in the
letter to Griesa that with past due interest, the award would be
approximately $1.65 billion by June 30.
Argentina claims that if it pays the holdouts it would face a
potential demand of up to $15 billion from other holdouts not
involved with the case, an amount representing more than half of the
government's $28.5 billion in foreign currency reserves.
But analysts say the $15 billion figure appears too high. Moody's
Investors service said the claims could rise to $7.5 billion if all
the unrestructured debt under New York law is now claimed. That
figure rises to $12 billion, Moody's said, if all holdout claims in
U.S. dollars and euros were to seek payment.
Roughly 93 percent of the bondholders who owned the approximately
$100 billion in sovereign debt that Argentina defaulted on in
2001-2002 accepted the restructuring for less than one-third the
original value of the bonds.
Argentina's restructured U.S. dollar denominated debt traded mixed
on the Tuesday after rallying on Monday to the best levels since
Par bonds maturing 2038 edged 0.017 points higher in price to bid
48.42, with the yield down to 9.07 percent.. Discount bonds maturing
2033 were off 0.79 points to bid 87.43, lifting the yield to 9.94
percent, according to Thomson Reuters data.
Argentina's share of the JPMorgan Emerging Markets Bond Index Plus
underperformed the index with yields over comparable benchmark U.S.
Treasuries wider by 5 basis points to 674 basis points and total
returns for the day down 0.17 percent.
Separately, the International Swaps and Derivatives Association (ISDA)
on Tuesday refused to consider whether default could be declared
based on statements last week by Kicillof that Argentina would not
pay its obligations and would seek other ways around Griesa's order.
(Additional reporting by Jonathan Stempel, Louis Charbonneau, Joseph
Ax, IFR's Davide Scigliuzzo in New York, and Walter Bianchi in
Buenos Aires; Editing by Tom Brown and Cynthia Osterman)
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