Argentina debt talks collapsed over price, guarantees
By Joan Magee
NEW YORK, Aug 14 (IFR) - Argentine debt talks collapsed due to disagreements over the price of its bonds and the absence of a government guarantee to honor payments on them, sources close to the discussions said.
International banks had appeared to be nearing agreement to buy Argentina paper from holdout creditors who have refused to accept a debt restructuring deal with the sovereign.
There were hopes a deal between Citigroup, Deutsche Bank, HSBC and JP Morgan on one side, and litigant investors led by Elliott Management and Aurelius Capital on the other, could come this week.
But the two sides could not agree on price, particularly as the government assurances weren't explicit or strong enough to justify a higher valuation, the sources said.
An initial offer of 80 cents on the dollar for the bonds was virtually halved to around 40 and 50 cents amid uncertainty over whether Argentina would actually pay the bonds - US$1.33bn plus accrued interest - next year.
For its part, Argentina was thought to be unwilling to provide a guarantee of payment to banks for fear of violating the RUFO clause, which expires at the end of the year and requires it to offer equal terms to restructured bondholders as well.
"None of the big banks want to hold illiquid assets forever," said Jorge Piedrahita, CEO at Torino Capital, a broker dealer focused on emerging market debt.
"You want more than a nod and a wink from (Argentine President) Cristina (Fernandez de Kirchner)," he said. "And that was not coming from the government." Continuación...