ARGENTINA/FILE: Argentine goverment prepares for debt meeting in New York as protesters rally against U.S. hedge funds

Record ID: 449153

  • Title: ARGENTINA/FILE: Argentine goverment prepares for debt meeting in New York as protesters rally against U.S. hedge funds
  • Date: 2nd July 2014
  • Summary: PLEASE NOTE: THIS EDIT CONTAINS MATERIAL THAT WAS ORIGINALLY 4:3 BUENOS AIRES, ARGENTINA (FILE) (REUTERS) OBELISK IN DOWNTOWN BUENOS AIRES VARIOUS OF PEOPLE WALKING THROUGH STREET AND CURRENCY EXCHANGE SIGNS EXTERIOR OF GOVERNMENT HOUSE
  • Embargoed: 17th July 2014 13:00
  • Keywords:
  • Location: Argentina
  • Country: Argentina
  • Topics: Economy
  • Reuters ID: LVA38TNWG5RXT4ZTFWCHEK7UWUMY
  • Story Text: Argentine government prepares to send negotiation team to New York amid hedge funds battle, as protesters burn vulture effigies in downtown Buenos Aires.


    Argentina will press a U.S. judge to unfreeze a coupon payment to holders of the country's restructured debt as a condition for negotiating with 'holdout' creditors suing for full repayment, said Cabinet Minister Jorge Capitanich on Wednesday (July 2).
    Latin America's No. 3 economy has been pushed to the brink of a fresh default by a string of U.S. court decisions that have forced it to negotiate with holdout investors who declined to restructure their bonds after the country's 2002 debt crisis.
    More than 92 percent of the country's investors agreed to receive less than 30 cents on the dollar in bond restructurings carried out in 2005 and 2010.
    The remaining holdout creditors rebuffed those terms and want 100 cents on the dollar, but say they are willing to negotiate.
    The Argentine government announced it will send a team to New York next week to set conditions for talks by way of a court-appointed mediator.
    "We have informed the public that on July 7 we will be participating in a meeting with the 'Special Master' designated by Judge Thomas Griesa to establish a dialogue with the objective of establishing fair, equal and legal negotiation conditions," said Capitanich. "In this context we understand that the first priority in the dialogue implies establishing the conditions of negotiations. And within the conditions of negotiation, naturally the objective is to respect the restructuring of the 92.4 percent and generate equal conditions, legal conditions and fair conditions for 100 percent of the bondholders."
    Argentina tried to make a coupon payment on its restructured debt due on Monday (June 23) but payout was blocked by U.S. District Court Judge Thomas Griesa, who says the government must settle with the holdouts before any more payments can be made on restructured bonds.
    The payment was in limbo after being deposited with transfer agent Bank of New York Mellon but not paid out.
    Griesa wants the money returned to Argentina but the government refuses to accept it, saying in a statement: "The Bank of New York [Melon] continues to breach its obligations by not allowing all bondholders to get paid."
    The country has until the end of this month to strike a deal with the holdouts or face what would be Argentina's second sovereign debt crisis in 12 years.
    Protesters against paying the hedge funds - known as vulture funds in Argentina - rallied outside the Ministry of Economy in Buenos Aires where they carried signs, American flags and vulture effigies.
    City of Buenos Aires deputy, Alejandro Bodart, expressed frustration with what he sees as government actions that lead to perpetual indebtedness.
    "On the one hand, the vulture funds situation is the last straw, the straw that breaks the camel's back. The government told us that paying the monetary fund [IMF] we were going to begin to get out of debt. Then came the debt with Repsol. They said that they were not going to pay and they ended up paying more than what we owed. Then came the Paris Club and they paid them because it was supposed to end the problems. And just a few days later comes Judge Griesa's ruling. And if they pay, tomorrow they are going to come again because debt is a system that is made so that you never finish paying it and so that everything this country produces permanently goes out, so that the big international economy groups and banks live well, while the people are hungry and living in misery," said Bodart.
    A new default would strain central bank reserves and prolong Argentina's banishment from the global bond market, depriving it of foreign investment needed to develop its shale oil sector and improve crumbling roads that are impeding key grains exports.
    Capitanich said Argentina will stress the need to respect its two restructurings as a basis for a deal with the holdouts, who the government regularly denigrates as vulture funds circling the remains of the country's 2002 debt crisis, which pushed millions of middle-class Argentines into poverty.
    The holdouts, led by Elliott Management Corp and Aurelius Capital Management, seek $1.33 billion plus accrued interest.
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