USA: U.S. judge orders Argentina to continue debt negotations after default deadline passes

Record ID: 449191

  • Title: USA: U.S. judge orders Argentina to continue debt negotations after default deadline passes
  • Date: 1st August 2014
  • Summary: NEW YORK CITY, NEW YORK, UNITED STATES (AUGUST 1, 2014) (REUTERS) EXTERIOR OF FEDERAL COURTHOUSE CLOSE-UP OF ADDRESS OF COURTHOUSE, 500 PEARL STREET COURT APPOINTED MEDIATOR, DANIEL POLLACK ARRIVES AT THE COURTHOUSE ATTORNEYS REPRESENTING ARGENTINA, JONATHAN BLACKMAN AND CARMINE BOCCUZZI, FROM CLEARY, GOTTLIEB, STEEN & HAMILTON LLP, ARRIVE AT THE COURTHOUSE CARMEN AMALIA CORRALES OF CLEARY, GOTTLIEB, STEEN & HAMILTON LLP, ARRIVES AT THE COURTHOUSE WITH UNIDENTIFIED MEN CAMERA CREWS OUTSIDE COURTHOUSE BLACKAMN, BOCCUZZI AND CORRALES EXIT COUTHOUSE AFTER HEARING REPORTERS ASK BLACKMAN QUESTIONS, FOLLOWING HIM AS HE WALKS DOWN THE STREET CAMERA CREWS ROBERT COHEN OF DECHERT LLP AND JAY NEWMAN OF ELLIOTT MANAGEMENT LEAVE COURTHOUSE EXTERIOR OF COURTHOUSE
  • Embargoed: 16th August 2014 13:00
  • Keywords:
  • Location: Usa
  • Country: USA
  • Topics: International Relations
  • Reuters ID: LVAB5DIH3PG3UP1Z6JP5KHDY8BJE
  • Story Text: Argentina's default this week did not "extinguish or reduce" the South American country's debt obligations, a U.S. judge said on Friday (August 1), and he ordered negotiations between the country and holdout investors to continue.
    In a stern tone, U.S. District Judge Thomas Griesa in New York criticized the decision by Latin America's No. 3 economy to default on $29 billion in debt earlier in the week rather than pay the holdouts as ordered.
    As Griesa was speaking, a committee facilitated by the International Swaps and Derivatives Association (ISDA) declared Argentina's failure to pay an interest payment a "credit event." The move triggers payment on insurance held on Argentine government debt, which analysts estimate could amount to roughly $1 billion.
    Griesa chided Argentina for making statements only about its obligations to bondholders who took large writedowns after its $100 billion default in 2002, and not the rights of the New York hedge funds at the center of the dispute, which had rejected the bond swaps.

    "What occurred this week did not extinguish or reduce the obligations of the Republic of Argentina," Griesa told a court hearing.
    The federal judge said both parties had an "obligation" to continue cooperating with court-appointed mediator Daniel Pollack. The Buenos Aires government on Thursday called Pollack "incompetent."
    Argentine bond prices, which earlier had extended Thursday's losses before holding steady, were largely unmoved by Griesa's comments. On international markets, Argentina's dollar-denomintated bond due in 2033 was down 4.000 points to a bid price of 84.184.
    The blue-chip Merval stock index was down 3.47 percent from Thursday's close at 7,903.67, while the peso currency traded fractionally weaker on the black market at 12.700.
    The Argentine government maintains it has not defaulted because it made a required interest payment to a bank intermediary on one of its bonds. But Griesa blocked that deposit in June, saying it violated his ruling that Argentina settle its dispute with holdout investors first.
    As a result, holders of $29 billion in Argentine bonds did not receive the interest coupon payment by a July 30 deadline.
    Argentine banks had scrambled to put together a proposal to buy out the holdouts' non-performing debt and avert the default. That attempt at a deal collapsed in the final hours.
    Some Argentine newspapers reported on Thursday that JPMorgan Chase & Co and other banks might be involved in a private-sector deal with the holdouts to help resolve the default. A JPMorgan spokesman said the U.S. investment bank had "no comment".
    Argentines already grappling with an economy in recession and one of the highest rates of inflation in the world took the default calmly, with many saying economic crises were the norm.
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