UPDATE 2-Latest twist in Argentina saga raises hopes of deal

miércoles 30 de julio de 2014 14:09 GYT
 

(UPDATES throughout)

By Joan Magee and Davide Scigliuzzo

NEW YORK, July 30 (IFR) - Last-ditch efforts by Argentina's local banking association Adeba to act as a white knight in talks with creditors has raised hopes the country can avoid a second default in 13 years.

Economy Minister Axel Kicillof was in New York meeting face to face with holdout creditors amid hopes that an offer from Argentine banks to stump up cash in escrow could save the day.

Negotiations are now revolving around how much local banks need to deposit as a goodwill gesture to give Adeba time to negotiate a way to pay holdouts themselves. By having banks satisfy such claims instead of Argentina, the government may find away around the so-called RUFO clause.

Argentina argues that the so-called RUFO (Rights Under First Offer) clause prohibits it from voluntarily paying the holdouts, who are demanding full payment on their bonds, better terms than the 25 to 29 cents on the dollar the other investors accepted.

"The RUFO clause has become Argentina's straw horse," said a source close to the talks.

"They're so paranoid about the RUFO clause and want to figure out a way where they can avoid default and not violate the RUFO. From their perspective, it's a possible solution."

Argentina fears that it may face billions of dollars of claims from investors who accepted the restructuring should it pay the holdouts in full.   Continuación...