NEW YORK (AFP) ― Argentina told a U.S. lawyer Monday that a court order demanding it pay more than $1.3 billion in debts by the end of the month had to be stayed so Buenos Aires can avoid defaulting.
Economy Minister Axel Kicillof outlined Argentina’s long-running position during four hours of talks in New York with attorney Daniel Pollack, appointed to break the impasse over debt payments.
There was no sign of a breakthrough after Kicillof swept out of the negotiations, refusing to speak to journalists gathered outside the Park Avenue building where Pollack works.
With the clock ticking toward a July 30 deadline, Argentina needs to reach a deal on paying more than $1.3 billion claimed by hedge funds, mainly NML Capital and Aurelius Management, which refused to join other bondholders in the
2005-2010 restructuring of the country’s defaulted debt.
New York federal judge Thomas Griesa has forbidden the country from making any payments to holders of the restructured bonds unless it pays the hedge fund “holdouts” at the same time.
As a result, Buenos Aires missed a payment on June 30, giving the country a one-month grace period to strike a deal with the holdouts before the restructured bond holders declare it in default.
Kicillof was flanked by security guards as he breezed through a throng of TV cameras, reporters and photographers and got into a waiting car, speeding off after the talks.
A statement from the economy ministry in Buenos Aires rehashed Argentina’s long-running position.
It said Kicillof asked for a stay to the judge’s order, saying that it was impossible to comply, but that talks would continue.
“Kicillof made clear that Judge Griesa’s order, as interpreted, would be of impossible compliance; that a new stay would be necessary since the case involves not only the litigants but it could also extend to all other bonds that did not participate in Argentina’s debt restructuring,” it said in English.
“The minister reaffirmed Argentina’s commitment to continue engaging in dialogue in order to ensure fair, equitable and legal conditions, taking into account the interest of 100 percent of bondholders.”
But NML made a fresh pitch to Argentina to reach a compromise to settle the impasse.
Writing in the Financial Times, Jay Newman, senior portfolio manager at NML parent Elliott Management, suggested a deal could be done which would cost Argentina significantly less in cash than the face value of the bonds.
Pointing to deals Buenos Aires did with other claimants and creditors, Newman said the hedge funds could accept partial settlement with new bonds and other financial instruments.
In such a deal, “Argentina’s foreign reserves would not be materially affected,” Newman said.
With the country’s foreign reserves below $30 billion, Argentina fears that any payments to the hedge funds could further weaken its finances.
Newman though said that after years of jousting, Buenos Aires needs to send a clear message that it is ready to deal.
“Our firm could be persuaded to give Argentina more time if its government took concrete and serious steps towards meeting its legal obligations,” he said.
