Argentina's Fernandez says willing to talk with all creditors

Fri Jun 20, 2014 7:13pm EDT
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By Hugh Bronstein

BUENOS AIRES (Reuters) - President Cristina Fernandez said on Friday her government would negotiate with all of Argentina's creditors in a bid to avoid a new debt default that would further weaken the country's ailing economy.

"We want to pay 100 percent of creditors," Fernandez said in a speech that boosted hopes of a settlement to the legal battle between her government and "holdout" investors who are demanding full payment following Argentina's massive 2002 bond default.

Argentina's financial markets were closed for a holiday, but international bond spreads, which measure default risk, tightened sharply after she spoke.

The country is locked in a 12-year-old fight in U.S. courts with the creditors who refused to accept a 2005 and 2010 revamp of debt securities.

More than 90 percent of creditors accepted the restructurings, which left them with less than a third of the original value of their bonds. But the holdouts demanded full payment and won a series of U.S. court rulings that have brought Argentina to the verge of a new default.

Until this week, Fernandez had refused to even consider negotiating with the holdouts. She portrayed them as "vultures" picking over the bones of the 2002 debt crisis, which thrust millions of middle-class Argentines into poverty.

But on Friday, gone was any harsh rhetoric in Fernandez's remarks.

"Argentina is willing to have a dialogue," she said.   Continued...

Argentine President Cristina Fernandez de Kirchner stands next to an Argentina flag during commemorations of the National Flag Day in Rosario June 20, 2014.  REUTERS/Argentine Presidency/Handout via Reuters