Argentina Yields Approach Three-Year Low as Mediator Meeting Set
Argentine bond yields dropped toward a three-year low on speculation the government will reach a negotiated solution with holdout creditors demanding payment for their defaulted bonds in U.S. courts.
The extra yield that investors demand to hold the South American nation’s debt instead of U.S. Treasuries narrowed 14 basis points, or 0.14 percentage point, to 683 basis points at 11:37 a.m. in New York, according to JPMorgan Chase & Co.’s EMBI Global index. The spread, which indicates Argentina is a less risky credit than Venezuela, Ukraine and Belize, shrank to 667 basis points on June 25, the narrowest since August 2011.
The Economy Ministry sent a statement late yesterday reiterating that an Argentine delegation will meet July 7 with Daniel Pollack, the court-appointed mediator in the case with creditors. The meeting rekindled optimism that Argentina and holdouts led by billionaire Paul Singer’s Elliott Management Corp. will reach a solution that will keep the South American nation from defaulting for the second time in 13 years.
“The market’s assuming they’ll be able to reach an agreement,” Daniel Marx, a former finance secretary who runs Buenos Aires consulting company Quantum Finanzas, wrote in a report today.
Argentina said in the statement that its meeting with the mediator, known as the special master, is a “clear expression of its willingness to negotiate in good faith.”
A U.S. judge has blocked Argentina from paying interest on its performing bonds until it transfers $1.5 billion to creditors who didn’t accept terms of Argentina’s restructurings after the country’s $95 billion default in 2001.
Past Agreements
Jay Newman, a portfolio manager at Elliott unit NML Capital Ltd., said yesterday in a CNBC interview that a successful settlement offer may include cash and bonds.
Argentina this year settled a dispute with Spanish oil company Repsol SA over the government’s takeover of YPF SA in 2012 by compensating the producer with bonds, and agreed to pay the Paris Club group of creditor nations $9.7 billion in installments.
Newman also said on CNBC that there has been “no sign” of Argentina preparing to negotiate with holdouts. Argentina said last night that demands from holdouts that the payment to restructured bondholders remain blocked signals they don’t want to reach a “fair” solution.
Both sides accusations signal an agreement is harder than what bond prices are reflecting, according to Siobhan Morden, the head of Latin America strategy at Jefferies Group LLC.
Goodwill Talks
“It simply looks like Argentina is loudly protesting against a decision for ideological and financial reasons and is raising public awareness against their perceived injustice,” Morden wrote in a report today. “The holdouts also reaffirmed the suspicion that there has been no goodwill to negotiate.”
After missing an interest payment on restructured bonds due June 30, Argentina is now in a 30-day grace period that ends July 30, after which it will be in default. U.S. District Court Judge Thomas Griesa blocked the $539 million payment on the government’s 2033 bonds last week.
Argentina’s CCC- credit rating was placed on creditwatch negative by Standard & Poor’s yesterday. S&P said there’s a 50 percent chance that the nation won’t make the payment before the end of the grace period, which would put Argentina under selective default.
Argentina may reach a settlement with holdouts even after a default, according to Casey Reckman, an economist at Credit Suisse Group AG.
“We continue to expect this conflict to be resolved with a settlement, though we acknowledge significant risk that selective default will occur before this materializes,” Reckman wrote in a report today.
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.net Rita Nazareth
Keine Kommentare:
Kommentar veröffentlichen