Argentina gets upper hand in debt battle
By Paul Kilby
NEW YORK, Feb 12 (IFR) - Argentina may soon regain access to the international capital markets and get the go-ahead to renew payments on defaulted bonds after gaining the upper hand in debt talks with so-called holdout investors.
The country has made good progress this month in its fight with litigant investors after the government offered US$6.5bn to creditors suing for about US$9bn in claims in US courts.
That offer has strengthened the South American country's hand in negotiations, arguably leaving the four holdouts that have so far declined to sign on to the deal on the back foot.
Indeed, the country's new finance team's conciliatory approach has cast doubt over the justification for maintaining a pari passu injunction imposed by the US courts that has prevented the sovereign from making payments on restructured bonds.
Argentina has made its offer conditional upon US judge Thomas Griesa lifting such restrictions - a necessary step for the country if it wishes to regain access to hard currency funding.
Griesa on Thursday ordered the holdouts to explain why the injunction should remain in force if the government can repeal the "lock law" that limits payments to holdouts and pay creditors who settle by February 29. Bondholders have until February 18 to make their case.
"It seems that the government has been able to turn the tide in US courts," said Ricardo Adrogue, head of emerging markets debt at Babson Capital.
"With the court welcoming the proposal, it might be more of an uphill battle for holdouts that were left not accepting the deal." Continuación...