Argentina Defaults According to S&P as Debt Meetings Continue
Argentina’s credit rating was cut to selective default by Standard & Poor’s as settlement talks with U.S. hedge funds led by Paul Singer’s Elliott Management Corp. continued past the country’s grace period.
The South American country passed today’s deadline for a $539 million payment on bonds due in 2033, after a U.S. judge ruled that the funds couldn’t be distributed unless the hedge funds holding defaulted debt also got paid. Still, bond prices for the securities surged 10.1 cents to 95.57 cents on the dollar today, the highest in three years, on bets the default will be short-lived as the parties held unprecedented face-to-face talks to reach a settlement.
The blown deadline comes amid two days of talks between Argentine officials led by Economy Minister Axel Kicillof and a court-appointed mediator in the debt case. A top Argentine banker and former Economy Ministry official arrived in New York today to make a last-minute proposal aimed at solving the dispute. Argentina will probably cure the default in the next few days if an agreement is reached, according to Goldman Sachs Group Inc.
“An Argentina default is expected to be short-lived at this point and shouldn’t have any major implication for the country,” said Mauro Roca, a senior Latin America economist at Goldman Sachs in New York. “There’s the expectation that a deal with holdouts will be worked out soon.”
To contact the reporter on this story: Camila Russo in Buenos Aires atcrusso15@bloomberg.net
To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.netDaniel Cancel, Bradley Keoun
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