Argentina Seeks Fair Negotiations With Holdouts, Fernandez Says

Argentina will negotiate with holders of defaulted debt from 2001 in a bid to stave off a new debt crisis, President Cristina Fernandez de Kirchner said today. Argentine bonds and stocks rallied.

The president has directed Economy Minister Axel Kicillof and the country’s attorneys to ask a U.S. judge to facilitate a negotiation with holdouts from two debt restructurings that’s beneficial to all of the nation’s creditors, she said in a speech from Rosario, Argentina.

“We want to meet our obligations with 100 percent of our creditors -- with the 92.4 percent that went in on the exchange, and also with those who didn’t,” she said. “We only ask that they give us fair conditions for negotiation that are in line with the Argentine constitution and national laws.”

Talks with the holdouts, who have a court order requiring Argentina to pay them in full when making payments on restructured notes, marks a turnaround for Fernandez. Yesterday, her cabinet chief Jorge Capitanich ruled out negotiations with the holdouts, less than a day after the nation’s attorneys told a U.S. judge policymakers planned on traveling to New York for talks. Argentina has a $900 million debt payment on bonds maturing in 2033 due on June 30 which could be blocked by the ruling.

The extra yield investors demand to hold Argentine debt over U.S. Treasuries narrowed 0.99 percentage point to 7.19 percentage points. That’s the biggest rally in emerging markets.

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