As Argentina's options narrow, investors bet against gov't

viernes 27 de junio de 2014 13:41 GYT

By Paul Kilby

NEW YORK, June 27 (IFR) - The battle between Argentina and holdout investors escalated this week as each side staked out its negotiating position before the clock starts ticking on Monday on a 30-day grace period that could end in default.

By depositing money on Thursday to make the required payment on the restructured bonds on June 30, the South American nation said it was expressing a willingness to pay.

But some brinkmanship was also at work, as the sovereign knows that a US court ruling requires it to disburse funds to both holdouts and restructured bondholders if it wants to avoid a technical default.

Argentina has few cards to play but that is not stopping it from baring its teeth, with Economy Minister Axel Kicillof defending his government's position at the UN in New York and garnering support from other LatAm countries in the process.

The government also embarked on an aggressive ad campaign in the US and Spanish papers, making its case against litigant holdout investors. One declared: "Argentina wants to keep paying its debt and they are not allowing it to."

The United Nations Conference on Trade and Development also chimed in, voicing its disapproval of US court rulings that favour litigant investors over Argentina.

The UN body called the recent rulings a setback for debt restructuring and warned that more holdout investors were likely to take an aggressive stance in snatching the assets of defaulted sovereigns.

"The rulings have made future debt restructuring much more difficult as debtors are left with only moral suasion and foreign relations as weapons to encourage creditor co-ordination," UNCTAD said.   Continuación...