Argentine bonds fell for a third day on concern that banks and credit holdouts are struggling to resolve a dispute on defaulted debt.
The nation’s government dollar bonds due 2033 dropped 0.82 cents to 82.35 cents on the dollar, pushing yields up 0.13 percentage point to 8.6 percent at 1:28 p.m. New York time. The extra yield investors demand to own Argentine debt over U.S. Treasuries widened 0.26 percentage point to 7.19 percentage points, the most in emerging markets, according to JPMorgan Chase & Co.’s EMBI Global indexes.
Argentine bonds are retreating from a four-year high on speculation talks aimed at reaching a third-party solution to Argentina’s default will fail, according to Michael Roche, an emerging-market strategist at Seaport Global Holdings LLC. Argentina defaulted on July 30 after a U.S. court blocked a $539 million payment on foreign debt because the country didn’t comply with a ruling to also pay its defaulted bonds.
“Initial enthusiasm is giving way to doubt,” Roche said in a telephone interview from New York. “The growing doubt is like air coming out of a balloon, instead of a pop of a balloon.”
A group of lenders and companies is now exploring a way to resolve the dispute, Eduardo Eurnekian, an Argentine billionaire who has been approached by bankers, said last week. They are seeking to buy defaulted debt from the holdouts and ask the U.S. judge to allow Argentina to pay the restructured bondholders, according to Eurnekian.
Direct talks between Argentine government officials and holdouts led by billionaire Paul Singer’s Elliott Management Corp. failed before the July 30 payment deadline.