Argentine bonds rose for the first time this week, while stocks rallied on speculation holders of the country’s defaulted debt demanding compensation in U.S. courts will support a delay of a ruling blocking payments on restructured notes.
Argentina’s dollar bonds due 2033 rose 1.1 cent to 89.59 cents on the dollar at 6 p.m. in Buenos Aires, according to data compiled by Bloomberg. The yield fell 0.15 percentage point to 9.63 percent. The country’s benchmark Merval stock index rallied 3.8 percent. A June 30 coupon payment of $539 million for the notes was blocked by U.S. courts and is being held at a Bank of New York Mellon Corp. account at the Argentine central bank.
Bonds and stocks of South America’s second-biggest economy gained after online news site Infobae, citing unidentified court officials, reported Argentina and holdout creditors led by Elliott Management Corp. may ask U.S. District Court Judge Thomas Griesa to grant a 24-hour stay on the ruling to allow the payment to go through and provide more time for negotiations. Argentine government officials have asked for a stay in the ruling to advance in a negotiated solution with holdouts and protect it from a bond contract clause that prevents it from making better voluntary offers to creditors before Dec. 31.
“Investors see it as positive because it means we’re getting closer to a solution,” Jorge Piedrahita, the chief executive officer of Torino Capital LLC, said in reference to the Infobae report.
NML Capital Ltd., the Elliott unit involved in litigation, said Argentina still refuses to meet and that the court already rejected a new suspension of the ruling.
“Argentina still refuses to meet with us or even attempt to reach a resolution of any aspect of this dispute,” NML said today in an e-mailed statement. “Instead, Argentina’s officials simply repeat over and over their demand for an unconditional suspension of the court’s ruling, which the court has already rejected.”
Argentina’s Economy Ministry spokeswoman Jesica Rey declined to comment.
Aurelius Capital Management LP, which won the court ruling along with Elliott, said in an e-mailed statement on July 14 that the country is “wholly undeserving of another stay now.”
The so-called discount bonds have fallen 4.1 cents on the dollar this week, the biggest five-day drop since January.
Ambito Financiero, a Buenos Aires-based newspaper, reported today that delegates sent by Argentina met at least twice with Elliott officials, asking them to support a stay. Ambito didn’t say how it obtained the information.
The extra yield investors demand to hold Argentine debt over U.S. Treasuries narrowed 0.37 percentage point, the most in emerging markets, to 6.32 percentage points, according to JPMorgan Chase & Co.’s EMBIG Diversified index.
State-run oil producer YPF SA’s American depositary receipts climbed 6.4 percent in New York. Hedge fund Third Point LLC, run by Dan Loeb, said in a second-quarter letter to investors it bought shares of the state-controlled oil producer after a selloff in January.
“We are in the midst of a critical inflection period for the country: if the government settles with its hold-out creditors, Argentina will regain access to global capital markets,” Third Point wrote in the letter. “We hope to uncover additional investment opportunities in Argentina as it emerges from its long malaise.”
Holdouts are unlikely to support a stay without a guarantee from Argentina that shows its willing to negotiate a payment, according to Siobhan Morden, the head of Latin America strategy at Jefferies Group LLC.
“The holdouts will only support a stay of execution on the conditionality that Argentina intends to pay, but you cannot rule out that either side blinks at the last moment,” Morden said.