9 de julio de 2014 / 16:23 / en 3 años

CORRECTED-Argentina bonds, CDS rally on proposal report

(Corrects graf 5 details about bond payments from press report)

By Joan Magee

NEW YORK, July 9 (IFR) - Argentina’s bonds and CDS are rallying this morning after a local press report said the government was mulling a proposal to make good on some of its disputed bonds without any haircut.

Five-year CDS on the sovereign tightened nearly 300bp to 1362bp this morning after the report was released by news website Infobae.

Meanwhile Argentina’s discount 2033s, on which the country was supposed to make a payment at the end of June, were up three points to 92.00-93.00.

The Bonar 2017s were up 2.5 points to 97.50 mid-market, while the Bonar 2024s were trading up three points to 99.50-100.50. The Boden 2015s were up 2.5 points to 100.00.

Infobae cited a source close to the government saying it was considering a proposal to pay the holdouts with its 2024s, the same bond Argentina used to pay Repsol, and a new bond maturing in 2028, without a haircut.

“It’s hard to tell with, but the situation seems to generally be moving in the right direction,” said a senior emerging markets portfolio manager.

But a representative from one of the holdout creditors, which have rejected any debt restructuring, told IFR that he had not heard about the press report and said Argentina had not contacted them with any proposal.

“We are taking this with a grain of salt. This happens a lot: they float things out in the press and see how it goes down,” he said.

“Given how hard we have pushed for face-to-face negotiations, and given how much Argentina wants to claim some sort of victory and do it all on their terms, it may be that we never really get in a room with Argentina,” he said.

“Maybe that is the way that they claim victory - by never telling us what they’re doing to do and just doing it.”

Argentina has been ordered by US courts, which have jurisdiction over the bonds in question, to make whole the creditors who refused to accept a debt restructuring deal.

The government has repeatedly termed the holdouts “vulture funds” and said it will not pay them. Economy Minister Axel Kicillof met with a US court-appointed mediator on Monday.

Any haircut on the bonds in question could potentially trigger a RUFO (right of first refusal) clause, which prohibits Argentina from voluntarily giving holdouts a better deal than the 93% of bondholders who accepted an earlier restructuring. (Reporting by Joan Magee; Editing by Marc Carnegie)

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