Argentina’s dollar bonds slipped as comments by officials fueled concern the country won’t be able to reach an accord with holdout creditors that would keep it from defaulting.
Notes due in 2017 fell 0.59 cent to 95.61 cents on the dollar at 4:07 p.m. in New York, the lowest level since July 8, after Cabinet Chief Jorge Capitanich said the onus was on bondholders to collect interest after Argentina was prevented from paying. President Cristina Fernandez de Kirchner said she invites holdouts to swap bonds under the same conditions the country offered in its 2005 and 2010 debt restructurings.
“We’re always willing to negotiate but within the margins of the law, within the judicial system and when it’s fair,” Fernandez said at a summit of leaders from Brazil, China, India, Russia and South Africa.
Investors are growing increasingly concerned that the South American nation and holders of its defaulted bonds won’t reach a settlement to end their court battle before the grace period on the interest payment expires July 30. With no further meetings scheduled after two discussions between government officials and court-appointed mediator Daniel Pollack last week, Economy Minister Axel Kicillof is in Brazil today for the BRICS summit.
“You have to start to question the goodwill of Argentina to pay the holdouts with officials attending the BRIC meeting despite no progress on talks and a tight two-week deadline,” Siobhan Morden, the head of Latin America strategy at Jefferies Group LLC, wrote in a report today.
Argentina has been under pressure to find a solution to the impasse since June 16, when the U.S. Supreme Court left intact a ruling that the government must pay holdouts $1.5 billion whenever it pays restructured bonds.
U.S. Judge Thomas Griesa on June 30 blocked the $539 million payment Argentina made for restructured bonds, saying it must also pay holders of securities from its 2001 default at the same time.
“There’s no possibility whatsoever of a default” because Argentina has paid on time, Capitanich told reporters in Buenos Aires today. “Bondholders should demand from the corresponding judge that they receive payments that Argentina made.”
Holdouts including Elliott Management Corp. and Aurelius Capital Management LP say Argentina is refusing to negotiate, while government officials insist that U.S. courts must suspend the effect of the ruling before talks can start.
Aurelius said this week that Argentina is “wholly undeserving” of another stay as officials refuse to meet.