Argentina to Avoid Potential July 30 Bond Default, Blejer Says

Argentina will successfully negotiate with holdout creditors and avoid a potential July 30 default, according to Mario Blejer, a former governor of the nation’s central bank.

“I am absolutely convinced that the negotiations will be successful,” Blejer, who is currently vice president of Banco Hipotecario SA, said in an interview today with Manus Cranny on Bloomberg Television’s “The Pulse.” “The government has been quite determined to try to normalize the situation with the international capital markets.”

Hedge funds that didn’t take part in Argentina’s 2005 and 2010 debt restructurings, following the country’s record $95 billion default in 2001, won a court ruling that ensures they get paid before the country can pay interest on its performing bonds. Argentina still hasn’t met with the funds, less than three weeks before the deadline for making coupon payments on the debt.

Reaching a settlement with bondholders will allow Argentina to borrow at lower levels and recover from recession, Blejer said. Borrowing at 8 percent would be “very acceptable,” he said.

The price on Argentinian bonds due 2033 touched the highest in three years last week on speculation the nation is making progress on reaching a deal to resolve the case. The yield on the debt rose six basis points to 9.12 percent at 2:08 p.m. in London.

“We have not seen any indication that Argentina is serious about even beginning a negotiation,” NML Capital, one of the holders of bonds from Argentina’s 2001 default that sued for full repayment, said in a statement July 11.

Before it's here, it's on the Bloomberg Terminal.