REFILE-UPDATE 1-Holdouts considering 80ct on dollar as Brazilians enter the talks: sources

miércoles 6 de agosto de 2014 17:44 GYT

(Adds dropped word in paragraph 10)

By Joan Magee

NEW YORK, Aug 6 (IFR) - Holdout creditors are considering an offer from international banks of 80 cents on the dollar for their roughly US$1.66bn holdings of Argentine debt, sources close to the negotiations said on Wednesday.

But Citigroup, Deutsche Bank, JP Morgan and HSBC, the four banks involved, are said to be unwilling to absorb the entire amount of debt in question, as they want holdouts to have reason to keep participating in the drawn-out legal fight over the bonds, the sources said.

After Argentina defaulted on previously restructured debt last week, the holdouts now worry that if a deal is not reached in timely fashion, the other bondholders could accelerate their bonds - potentially leaving the holdouts with nothing to show for a roughly decade-long legal fight to get payment in full from the sovereign on their holdings.

At the same time, the banks that would purchase the debt are looking for assurance that the sovereign would in turn make them whole on the purchased bonds next year, after a contentious so-called RUFO clause which Argentina says limits its ability to pay the holdouts itself, expires.

But any implied or explicit guarantee of full payment could be construed as a violation of the clause.

"The banks have so far received no guarantees from the government that they might get better terms than those offered in the 2005 and 2010 restructurings once the RUFO clause expires," said an investor. "Such a guarantee would be required by the banks to complete a deal."

At 80 cents on the dollar, the banks would be putting up around USD1.32bn, of which a certain percentage would be held by holdouts. With accrued interest, the total amount Argentina would owe on the holdout bonds would be around USD1.75bn.   Continuación...