Friday, July 11, 2014 No resolution reached between Argentine officials, debt holdouts

Friday, July 11, 2014

No resolution reached between Argentine officials, debt holdouts

Court apponited mediator Daniel Pollack (C).

Argentine officials and holdout investors met separately with the court-appointed mediator for five hours today, presenting their cases in hopes of resolving a default dispute that has dragged on for over 12 years.

"The parties, including representatives of the Republic of Argentina and representatives of the bondholders, together with their respective lawyers, came to see me this afternoon. They each presented their positions to me, but not in the presence of the other side," Daniel Pollack, the Special Master appointed by US District Judge Thomas Griesa said in a statement.

"No resolution has been reached. It is my hope that there will be future dialogue," Pollack said.

The Argentine delegation, lead by Finance Secretary Pablo López and without Economy Minister Axel Kicillof, attended the meeting in New York today at 1pm and left 5 hours later without making any comments.

In official comuniqué, the Economy Ministry revealed the meeting was "eminently technical".

The Argentine delegation requested a stay in order to continue negotiations, as Argentina needs to seal a deal before a July 30 deadline with investors who rejected its debt restructurings.

Economy Ministry officials also explained Mr Pollack the critical consequences Judge Griesa’s interpretation of the pari passu clause could have on Argentina, as other holdouts could claim full debt payment for over 15 billion dollars, while saying a proper negotiation needs more time, stating the Repsol case, in which Argentina had talks with the Spanish petrol company for over two years.

US District Judge Thomas Griesa has ruled Argentina must immediately pay the group of holdouts, led by hedge funds Elliott Management Corp and Aurelius Capital Management, the bonds' full value worth $1.33 billion plus accrued interest.

Griesa's ruling also ordered Argentina not to pay out to other investors who accepted large writedowns on their debt holdings until it had settled with the holdouts. More than 92 percent of investors agreed to receive less than 30 cents on the dollar in restructurings carried out in 2005 and 2010.

When Argentina in late June deposited a coupon payment worth about $539 million with the government's transfer agent, Bank of New York Mellon (BONY), Griesa blocked any onward transfer.

Since then the bank has faced competing demands: from Griesa's court order, from investors who want their interest payment and from Argentina, which says the money no longer belongs to it.

Yesterday, BONY said Euro bondholders had threatened to sue the bank if it returned the funds to Argentina.

"(The bank) seeks clarification that it may comply with this Court's Injunctions by retaining the funds received from Argentina in the Banco Central Accounts where they are presently held," BONY wrote in the opening statement of the motion.