|
 NML Capital Ltd, a unit of Elliott Management Corp suing for full
repayment on its bondholdings, said Argentine officials refused to
meet or negotiate ahead of a July 30 deadline.
"The Argentine government appears determined to default. We hope it
chooses to avoid this dead-end path," NML said.
If recession-hit Argentina fails to pay out or cut a deal with the
New York hedge funds, it faces a default that would prolong its
banishment from global capital markets and pile more pressure on an
ailing currency.
Argentina says it needs a stay of the U.S. court order that
triggered the deadline to reach agreement with the funds, which
rejected the terms of huge writedowns after Argentina's $100 billion
default in 2002.
Argentine dollar-denominated bonds earlier rallied in
over-the-counter trading on market chatter the holdouts were open to
a suspension.
The holdouts' lawyers said on June 24 the hedge funds would
accommodate the government on timing if talks progressed well.
A source close to the situation regarding the holdouts' position
told Reuters: "Their position is unchanged and it will remain
unchanged."
SPECULATION
After NML's statement, the price of Argentina's dollar-denominated
Discount bond slipped from an intraday high of $91.0 to $90.40,
still 1.1 percent up on the day. Its dollar-denominated Par bond was
3.80 percent higher at $52.30, having earlier hit $52.75.
One bond trader in Buenos Aires said investors were still betting on
either a stay or a deal.
"Prices won't fall because of what NML has said," the trader said on
condition of anonymity. The two sides have not met face-to-face,
raising questions over Argentina's commitment to finding a
resolution.
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Asked whether talks were planned for next week, a government source
said: "Nothing has been confirmed yet."
JP Morgan's Emerging Markets Bond Index Plus showed yield spreads
between Argentina and comparable benchmark U.S. Treasuries narrowed
by 28 basis points to 640 as of 14:45 EDT (1845 GMT). Total returns
on the day were up 2.07 percent, far better than the overall index
which was up 0.22 percent.
Argentina 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.
Griesa ruled Argentina could not service its restructured debt until
it settled with the "holdouts" and blocked a June 30 interest
payment, triggering a 30-day grace period.
Analysts say while the holdouts' legal position is strong, a fresh
default would not serve their interest.
"In that case, the situation will become really ugly and there won't
be any money for anyone," said Alberto Bernal, head of emerging
markets at Miami-based Bulltick Capital Markets.
(Additional reporting Eliana Raszewski in Buenos Aires and Jorge
Otaola in Buenos Aires; Editing by W Simon, Andrew Hay and Chizu
Nomiyama)
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