Argentina said that it doesn’t oppose a deal sought by JPMorgan Chase & Co. and other banks that would allow the country to resume debt payments, as its dollar bonds sank for a second day, Bloomberg News reported today. Argentina’s Economy Minister Axel Kicillof said that the government wouldn’t oppose a third-party solution to its dispute with a group of hedge funds who successfully sued the country for $1.5 billion. A U.S. judge has blocked Argentina from paying its debt — including an interest payment due July 30 on $13 billion of bonds — until the hedge funds led by Elliott Management Corp. get their money. Standard & Poor’s declared the country in default while Moody’s Investors Service placed its rating on negative outlook. Kicillof’s comments came as a group of international investment banks met with Elliott and the other so-called holdout creditors to propose buying securities they own from an earlier default in 2001. The nation was supposed to pay $539 million in interest yesterday on its bonds due in 2033. The deadline passed after two days of negotiations at a court-appointed mediator’s office in New York failed to produce a settlement with the hedge funds. Argentina can’t participate in a settlement with the hedge funds because doing so would require the country to similarly sweeten terms for the 93 percent of investors who went along with the country’s debt restructurings in 2005 and 2010, Kicillof said. Those investors got about 30 cents on the dollar. The requirement, known as the RUFO clause, could trigger claims of more than $120 billion, dwarfing the country’s $29 billion of reserves, he said. The clause is set to expire at the end of 2014.
http://www.bloomberg.com/news/print/2014-07-31/argentine-bonds-halt-two…
In related news, the International Swaps and Derivatives Association (ISDA) has agreed to consider whether a credit event has occurred on Argentina's credit default swap contracts (CDS), Reuters reported yesterday. Swiss bank UBS yesterday submitted the request for ISDA's determinations committee to consider whether a "failure to pay" credit event has occurred, citing a missed deadline to deliver interest payments to exchange bondholders. ISDA's 15-member committee is expected to vote on whether a payment on Argentine CDS contracts can be triggered in the next couple of days.
http://www.reuters.com/article/2014/07/31/argentina-debt-cds-idUSL2N0Q6…