Argentine dollar-denominated bonds rallied on Friday in over-the-counter trading on market chatter that "holdout" investors suing for the full payment of bonds were open to the idea of reinstating a court stay.
Recession-hit Argentina has until July 30 to settle with the New York-based hedge funds or face another painful debt default that would prolong its banishment from international capital markets and pile more pressure on an ailing currency.
Its government says it needs a suspension, or stay, of the U.S. federal court order that triggered the deadline to negotiate further with the funds, which rejected the terms of 2005 and 2010 debt restructuring agreements after the country's $100 billion default in 2002.
"The rumours of a possible stay are affecting asset prices, but there is no concrete news," bond trader Roberto Drimer told Reuters.
Lawyers representing the holdouts said on June 24 the hedge funds would be willing to accommodate the government on timing to let it pay other bondholders if talks to settle the dispute had made good progress ahead of July 30. [ID:nL2N0P51WC]
A source close to the situation regarding the holdouts' position told Reuters: "Their position is unchanged and it will remain unchanged."
However, debt holdout NML Ltd on Friday said the Argentine government still refuses to meet or negotiate a resolution to the debt dispute.
"We hope it chooses to avoid this dead-end path,” NML said in a statement.
The price of Argentina's dollar-denominated Discount bonddue in 2033 was up 1.8 percent to 91. Its dollar-denominated Par bond due in 2038 rose 3.6 percent to 52.20.
The holdouts placed an ad in a local daily on Wednesday to warn President Cristina Fernandez's government that time was running out to cut a deal, urging Argentines to demand their leaders behave in a "serious and responsible manner."
Fernandez fired back with typically fiery rhetoric that the demands of the funds, portrayed by the government as vultures, were impossible to meet.
NO TALKS PLANNED
While two separate Argentine delegations held talks in New York with a U.S. court-appointed mediator last week, there have been no negotiations this week that have been acknowledged publicly. The two sides have not met face-to-face, raising questions over Argentina's commitment to finding a resolution.
Asked whether further talks were planned for the week beginning July 21, a government source said: "Nothing has been confirmed yet."
JP Morgan's Emerging Markets Bond Index Plus <11EMJ> showed yield spreads between Argentina and comparable benchmark U.S. Treasuries have narrowed by 29 basis points to 640 as of 12:35 EDT (1635 GMT). Total returns on the day are up 2.06 percent, far better than the overall index which is up just 0.18 percent on the day.
Argentina has exhausted its legal options to get around a 2012 ruling by U.S. District Judge Thomas Griesa that it pay holdouts $1.33 billion, plus accrued interest.
Griesa ruled Argentina could not service its restructured debt until it settled with the "holdouts" and blocked a June 30 interest payment, leaving the funds in limbo and triggering a 30-day grace period.
Griesa will on July 22 hear arguments next Tuesday related to the banks and payment agents caught up in Argentina's sovereign debt crisis.
Analysts say that although the holdouts legal position is strong, a fresh default would not be in their interest.
"In that case, the situation will become really ugly and there won't be any money for anyone," said Alberto Bernal, head of emerging markets at Miami-based investment bank and broker Bulltick Capital Markets.
Source: Reuters
Recession-hit Argentina has until July 30 to settle with the New York-based hedge funds or face another painful debt default that would prolong its banishment from international capital markets and pile more pressure on an ailing currency.
Its government says it needs a suspension, or stay, of the U.S. federal court order that triggered the deadline to negotiate further with the funds, which rejected the terms of 2005 and 2010 debt restructuring agreements after the country's $100 billion default in 2002.
"The rumours of a possible stay are affecting asset prices, but there is no concrete news," bond trader Roberto Drimer told Reuters.
Lawyers representing the holdouts said on June 24 the hedge funds would be willing to accommodate the government on timing to let it pay other bondholders if talks to settle the dispute had made good progress ahead of July 30. [ID:nL2N0P51WC]
A source close to the situation regarding the holdouts' position told Reuters: "Their position is unchanged and it will remain unchanged."
However, debt holdout NML Ltd on Friday said the Argentine government still refuses to meet or negotiate a resolution to the debt dispute.
"We hope it chooses to avoid this dead-end path,” NML said in a statement.
The price of Argentina's dollar-denominated Discount bond
The holdouts placed an ad in a local daily on Wednesday to warn President Cristina Fernandez's government that time was running out to cut a deal, urging Argentines to demand their leaders behave in a "serious and responsible manner."
Fernandez fired back with typically fiery rhetoric that the demands of the funds, portrayed by the government as vultures, were impossible to meet.
NO TALKS PLANNED
While two separate Argentine delegations held talks in New York with a U.S. court-appointed mediator last week, there have been no negotiations this week that have been acknowledged publicly. The two sides have not met face-to-face, raising questions over Argentina's commitment to finding a resolution.
Asked whether further talks were planned for the week beginning July 21, a government source said: "Nothing has been confirmed yet."
JP Morgan's Emerging Markets Bond Index Plus <11EMJ> showed yield spreads between Argentina and comparable benchmark U.S. Treasuries have narrowed by 29 basis points to 640 as of 12:35 EDT (1635 GMT). Total returns on the day are up 2.06 percent, far better than the overall index which is up just 0.18 percent on the day.
Argentina has exhausted its legal options to get around a 2012 ruling by U.S. District Judge Thomas Griesa that it pay holdouts $1.33 billion, plus accrued interest.
Griesa ruled Argentina could not service its restructured debt until it settled with the "holdouts" and blocked a June 30 interest payment, leaving the funds in limbo and triggering a 30-day grace period.
Griesa will on July 22 hear arguments next Tuesday related to the banks and payment agents caught up in Argentina's sovereign debt crisis.
Analysts say that although the holdouts legal position is strong, a fresh default would not be in their interest.
"In that case, the situation will become really ugly and there won't be any money for anyone," said Alberto Bernal, head of emerging markets at Miami-based investment bank and broker Bulltick Capital Markets.
