Argentine Bonds Rally With Stocks as Mediator Meeting Extended
Argentina’s stocks and bonds rallied on speculation the government is moving closer to reaching an accord to avert default as a meeting with a court-appointed mediator extended into the early evening.
Argentina’s benchmark Merval (MERVAL) stock index jumped 6.5 percent, after earlier losing as much as 1.1 percent, to close at the highest since June 23. Argentine bonds due 2033 rose 0.35 cent to 84.22 cents on the dollar at 5:50 p.m. in Buenos Aires, erasing earlier losses.
An Argentine delegation led by Finance Secretary Pablo Lopez took a break after meeting with court-appointed mediator Daniel Pollack for about five hours and will resume talks this afternoon, state-run news agency Telam reported, citing a person close to the talks who it didn’t identify. U.S. District Court Judge Thomas Griesa blocked a debt payment due June 30 because the country didn’t comply with a court ruling that ordered it to pay defaulted bonds at the same time. A grace period expires tomorrow.
“If they resume the meeting, it must be because they have something to talk about,” said Guillermo Mondino, an emerging-markets economist at Citigroup Inc. “It’s remarkable how the market reads a break in a meeting.”
Officials arrived at the Manhattan office at 11:15 a.m.
In the four previous meetings they’ve held with Pollack, Argentine officials have asked for the court to delay the ruling until January and for holdouts to offer protection against a clause that prohibits the nation from sweetening the deal to holdouts without making the same offer to exchange bondholders.
The government has thus far rejected direct talks with holdouts as urged by Pollack. The last meeting lasted just one hour.
Holders of Argentine Euro bonds filed an emergency request to halt litigation over the South American nation’s defaulted bonds, citing an agreement by some debt-holders to waive a key clause as justification to allow settlement talks extra time.
On June 16 the U.S. Supreme Court left intact an order for Argentina to pay holders of defaulted bonds including Elliott Management Corp. about $1.5 billion whenever it pays restructured debt.