Argentina’s Credit Default Swaps Surge to Highest Since 2009

The cost to protect Argentine bonds against default jumped to a three-year high as concern mounted that the country’s legal battle with defaulted debt holders will spark a new halt in payments.

Five-year credit default swaps gained 384 basis points to 3,040 basis points, the highest in the world, according to data compiled by Bloomberg. The contracts climbed as much as 640 basis points earlier to 3,296, the highest since April 2009. One-year swaps surged 848 basis points to a record 7,419.350 at 4:49 p.m. in New York.

Argentina is scheduled to file a brief today with U.S. District Judge Thomas Griesa before he decides how much the country will have to pay defaulted bondholders including Elliott Management Corp.’s NML Capital Fund. In a Nov. 9 conference, Griesa requested the government also provide today an affidavit affirming that it won’t “evade directives” of the court’s orders, in response to concern President Cristina Fernandez de Kirchner would disregard its decision.

A federal appeals court in New York upheld on Oct. 26 Griesa’s earlier ruling that Argentina can’t pay restructured bondholders without honoring its securities that are still in default. The South American country has reached restructuring agreements with holders of about 93 percent of its defaulted bonds after halting payments in 2001.

To contact the reporter on this story: Katia Porzecanski in New York at kporzecansk1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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