Argentina: hopes of a deal strengthen

viernes 8 de agosto de 2014 09:25 GYT

By Joan Magee and Davide Scigliuzzo

NEW YORK, Aug 8 (IFR) - Holdout creditors are considering an offer from international banks of 80 cents on the dollar for at least part of their holdings of about US$1.66bn of Argentina debt, but the road to any deal will be fraught with difficulty.

Sources close to the situation said that Citigroup, Deutsche Bank, JP Morgan and HSBC, the four banks involved, are 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 sovereign's obligations.

The banks may, nonetheless, be willing to buy some of the holdout creditors' debt, possibly as part of a wider consortium that they will put together.

It is unknown if an eventual agreement would include all four banks, or only some of them, one source said - though all are in intense negotiations over the securities in question.

One factor making a deal more likely is that, since Argentina defaulted on previously restructured debt on July 30, other bondholders could accelerate those bonds. That could potentially leave the holdouts, who refused the restructuring deal that the others accepted, with nothing at all to show for a roughly decade-long legal fight to get payment in full from the sovereign.

This is because an acceleration would mean the holdouts become just another set of creditors seeking full payment rather than being at the front of the queue as they were before Argentina's latest default. The holdouts are led by Aurelius Capital and NML Capital.

" are petrified that par bondholders would accelerate," said an investor close to the talks. "That would leave them in a no-win position."

At the same time, banks that end up buying the holdouts' paper will be looking for assurances that the sovereign will repay the bonds they buy at par next year, after the expiry of a so-called RUFO clause, which Argentina has used as reason for not paying the holdouts.   Continuación...