Argentina dubs holdouts an 'international mafia' as deal hopes fade

Thu Aug 14, 2014 6:45pm EDT
 
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By Hugh Bronstein and Davide Scigliuzzo

BUENOS AIRES (Reuters) - Argentina branded the hedge funds suing the country over their debt holdings an "international mafia" on Thursday after talks to bring a swift end to its latest default collapsed and sent Argentine bond prices tumbling.

A group of international banks had appeared to be nearing a deal to buy a chunk of the debt held by holdout creditors whose legal battle against Argentina tipped Latin America's No. 3 economy into default on July 31.

But holdout fund Aurelius Capital Ltd said on Wednesday there was "no realistic prospect" of a private solution, dealing a heft blow to market optimism Argentina's second default in little over a decade could be swiftly cured.

Argentine bonds extended losses in local over-the-counter trading. The dollar-denominated Par bond ARPARD=RASL slumped 4 percent to a bid price of 48.4, while the dollar-denominated Discount bond ARDISCD=RASL shed 1.7 percent to end at 82.55.

"Today we are in the hands of an international financial power comprised of small, voracious interests that form a real international mafia," Argentine Cabinet Chief Jorge Capitanich, told reporters.

Although Argentine bond prices remained way off prices typical of distressed debt, the sharp falls pointed to fading confidence on Wall Street of a quick end to the country's latest debt saga.

Talks between Citigroup (C.N: Quote), Deutsche Bank (DBKGn.DE: Quote), HSBC (HSBA.L: Quote) and JP Morgan JPM.L appeared to collapse over disagreements over the price the banks would pay and the absence of a guarantee from the government it would honor payments on them, sources told Thomson Reuters IFR.

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Supporters of Argentina's government hold a sign that reads "Homeland or vultures" before a rally against the payment to what the government calls "vulture" creditors in Buenos Aires, August 12, 2014.   REUTERS/Marcos Brindicci