NEW YORK/BUENOS AIRES, Feb 1 (Reuters) - Argentina’s government returned to debt talks in New York on Monday, expecting to make an offer this week to U.S. creditors suing over unpaid bonds in a bid to resolve a decade-long stand-off that has locked the country out of global capital markets.
A Reuters witness saw Finance Secretary Luis Caputo enter the building that houses the office of mediator Daniel Pollack about one hour before Pollack himself arrived.
As Caputo headed into the make-or-break talks, Argentine bonds made fresh gains after the government secured a $5 billion bank load to bolster the central bank’s foreign currency reserves.
“The bondholders will be here and Argentina will be here,” Pollack told reporters on his way into his office to meet with Caputo.
Newly elected President Mauricio Macri told Reuters at the World Economic Forum in Davos on Jan. 22 that he wanted to find a fair agreement “early this year”. He said the biggest sticking point was the issue of penalties on the defaulted bonds.
Investors question whether Macri will seal a deal before Argentina’s Congress, which must approve any accord, returns in early March.
“In their minds, by the planned start of Congress they would have a resolution with the holdouts. I think they’re now starting to have some doubts about whether it’s going to be possible,” said Alejo Costa, chief strategist at Buenos Aires-based investment bank Puente.
Even so, foreign investors remain optimistic of a deal this year.
The country’s defaulted 2033 U.S. dollar discount bonds rose 1.6 cents to 112.6, just three cents off the eight-year highs hit after the election outcome while the 2038 Par bond and a 2038 euro-denominated issue inched up 0.4 cent and 0.3 cent respectively to two-week highs .
Macri’s predecessor, Cristina Fernandez, refused to settle with the funds that spurned debt restructurings following Argentina’s record $100 billion default in 2002. Fernandez called them “vultures”.
“The big kicker for the country is to settle this as quickly as possible to regain access to international capital markets so that they can start issuing new bonds at reasonable rates,” said Rune Hejrskov, senior portfolio manager at Jyske Invest, which holds Argentine debt. (Additional reporting by Tariro Mzezewa in New York, Writing by Richard Lough Editing by W Simon)