Messy situation as Argentina debt default looms

martes 29 de julio de 2014 18:05 GYT

By Chris Spink

LONDON, July 29 (IFR) - Argentina will find itself in its second default of the 2000s on Thursday unless a last-minute deal is reached with holdout creditors who have rejected a debt restructuring deal.

The long-running battle between the government and the holdouts finally comes to a head at midnight Wednesday in New York, when a 30-day grace period - for a belated bond interest payment due back in June - expires.

US Judge Thomas Griesa, a key player in the dispute over the US law bonds, appointed a mediator for talks earlier this month. But Argentina and the creditors did not meet face to face.

"We are not happy that it has come to this," a source close to the holdouts told IFR on Tuesday. "We have always maintained that this can easily be resolved."

Over nearly a decade, however - since Argentina's first debt restructuring in 2005 - the country repeatedly said it would never make whole what it deemed the "vulture funds" that make up the bulk of the holdout creditors.

Many of the holdouts bought Argentine bonds at a fraction of face value as the country plunged into a financial crisis around the start of the 2000s - and they want the bonds paid in full.

But the majority of bondholders at the time accepted a 2005 debt restructuring for 25 cents on the dollar. Argentina insists that a clause in the bonds would leave it open to legal claims from those who took the deal and had not been offered the same full payment terms.

As those who accepted the exchange accounted for more than 93% of Argentina's then-bondholders, having to make them whole as well would be tremendously expensive for the country.   Continuación...