Argentina awaits decision on appeal
(This story originally appeared on IFRe.com, a Thomson Reuters publication)
* Technical default a real risk
* Delays could spur new issuance
* Open door to negotiated settlement
By Davide Scigliuzzo and Joan Magee
NEW YORK, May 30 (IFR) - The countdown to a US Supreme Court decision on Argentina's petition for a reversal of an earlier ruling favouring holdout creditors has begun. Deliberations start on June 12.
Many investors are betting that the case will continue to be bogged down in the courts. That, paradoxically, could open the floodgates for more issuance from the country and a further rally in Argentina assets, as a delay would give the sovereign breathing space and provide room for issuers to come to market.
But the risk that the court could reject the country's appeal outright - forcing the sovereign into a technical default - remains very real.
"If there are more delays, the market could go up big time. But if they are forced into a technical default, bonds could drop 15 points," said a New York based trader. Continuación...