Argentina slams U.S. judge, holdouts see no private debt deal

Wed Aug 13, 2014 6:35pm EDT
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By Hugh Bronstein and Daniel Bases

BUENOS AIRES/NEW YORK (Reuters) - Prospects for a private sector solution to Argentina's sovereign debt dispute deteriorated on Wednesday after holdout investors said they entertained no realistic offers from bankers while the government dashed hopes it might soon agree to restart talks.

The country's peso currency hit a record low on fears that the already years-old debt saga would linger on indefinitely.

Addressing rumors in the marketplace of offers from big international banks to buy up its position in defaulted debt, one lead holdout investor said after many meetings nothing presented made sense for a settlement on bonds dating back to a near $100 billion default in 2002.

"That engagement has convinced us that there is no realistic prospect of a private solution," Aurelius Capital Management said in a statement.

Aurelius is run by Mark Brodsky, who, along with his former firm Elliott Management Corp, have waged a decade-long battle in the U.S. courts to collect on the defaulted Argentine debt they have owned and purchased at steep discounts over the last 12 years. The holdouts spurned two prior restructurings, holding out for better terms.

"No proposal we received was remotely acceptable. The entities making such proposals were not prepared to fund more than a small part, if any, of the payments they wanted us to accept. One proposal was withdrawn before we could even respond. And no proposal made by us received a productive response," the statement said.

Citigroup (C.N: Quote), Deutsche Bank (DBKGn.DE: Quote), HSBC (HSBA.L: Quote) and JP Morgan (JPM.N: Quote) offered the holdout hedge funds 40 cents on the dollar for the roughly $1.66 billion of bonds, including interest, and raised the offer to 50 cents on Monday, sources told Thomson Reuters IFR.

A second default occurred after Argentina missed a July 30 deadline for coupon payments on bonds restructured in 2005 and 2010. After the deadline passed, hopes turned toward proposals drawn up first by Argentina and then by large international banks to work out a solution.   Continued...

People walk past a poster depicting U.S. District Court for the Southern District of New York Judge Thomas Griesa as a vulture in Buenos Aires, August 12, 2014.    REUTERS/Marcos Brindicci