Argentine Dollar Bonds Fall Ahead of Debt Hearing Tomorrow

Argentine dollar bonds declined as investors awaited a court hearing tomorrow on the nation’s debt conflict with holdout creditors ahead of a possible default at the end of the month.

Government bonds due 2033 fell 1.5 cent to 88.14 cents on the dollar at 5:26 p.m. in Buenos Aires, according to data compiled by Bloomberg. The yield on the notes widened 21 basis points to 9.8 percent. The securities have fallen 5.9 cents since touching a three-year high on July 9.

“The market is anxious to see the result of tomorrow’s hearing,” Jorge Piedrahita, chief financial officer of Torino Capital LLC, wrote in a note.

U.S. District Court Judge Thomas Griesa set a hearing tomorrow to consider pending requests from bondholders and banks affected by his ruling to reward a group of holdout creditors about $1.5 billion that must be paid at the same time Argentina pays its restructured debt. Griesa will rule on motions by bondholders seeking the release of $539 million of debt payments blocked by the judge and banks that have been caught in the middle of the conflict.

Argentina has met twice with a court-appointed mediator in New York to find a solution with holdouts as a 30-day grace period for the nation to pay its performing creditors is set to expire by July 30.

Daniel Kerner, Latin America director at Eurasia Group, said Argentina’s “risks of technical default are rising rapidly” since parties haven’t progressed in negotiations.

Argentina today asked Griesa to delay his rulings to allow more time to reach a deal with the holdouts.

President Cristina Fernandez de Kirchner wants to avoid triggering a Rights Upon Future Offers clause in the restructured bond contracts subjecting the nation to additional claims that could total $500 billion, according to today’s filing.

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