Argentine Debt Team to Meet With Mediator
Nation has 30-day Grace Period to Avoid its Second Default in 13 Years
By Ken Parks and
Nicole Hong
Updated June 30, 2014 10:06 p.m. ET
BUENOS AIRES—Argentina said Monday night that it will send a delegation to meet with a court-appointed lawyer on July 7 as it tries to resolve a dispute with a small group of creditors that could see the South American country default for a second time in 13 years.
Argentina's long-running battle with hedge funds in U.S. courts entered a critical phase after U.S. District Judge Thomas Griesa on June 27 blocked the country from making $539 million in interest payments that were due on some of its bonds Monday.
Argentina will likely default if it can't get that money to bondholders before a 30-day grace period expires in July. The judge has ruled that Argentina must pay the hedge funds that are suing to collect on defaulted bonds at the same time it pays investors who own bonds the country issued after its 2001 default.
Monday's announcement marks the first time that Argentine officials are set to meet with Daniel Pollack, the New York attorney Judge Griesa named last week to oversee negotiations between the two sides.
Argentina's Economy Ministry said it intends "to negotiate in fair, equitable and legal conditions that take into account the interests of 100% of its creditors."
The news comes shortly after one of the holdout creditors, Elliot Management Corp., said that the country has refused to negotiate any aspect of the dispute. There have been no negotiations and no negotiations are under way, Elliot said.
Attorneys for both parties participated in conference calls hosted by Mr. Pollack on Friday and Saturday that apparently made little progress. Those calls followed a visit to New York last Thursday by Economy Minister Axel Kicillof, who spoke at the United Nations about Argentina's fight with the hedge funds before boarding a return flight to Argentina.
Argentina defaulted on about $100 billion of its debt during an economic crisis in 2001. The country in 2005 and 2010 offered holders of the defaulted bonds new, heavily discounted debt in exchange. Between the two swaps, investors agreed to exchange almost 93% of the defaulted bonds.
However, hedge funds led by Elliott's affiliate NML Capital Ltd. and Aurelius Capital Management LP decided not to tender their bonds and instead sued for full repayment. So far, they have won about $1.5 billion in the courts after years of litigation.
Argentine officials have refused to pay the holdouts in full, arguing that a settlement would trigger billions of dollars in claims by other creditors and bankrupt the country. Argentina has virtually run out of legal options to appeal the ruling after the U.S. Supreme Court on June 16 denied its appeal and left in place Judge Griesa's decision that Argentina must treat its different groups of creditors equally.
President
Cristina Kirchner's government has accused Mr. Griesa of favoring the holdout creditors and trying to push the country into default.
Jorge Capitanich, Mrs. Kirchner's cabinet chief, said earlier Monday that Argentina might put its grievances before unnamed international organizations.
—Shane Romig contributed to this article.
Write to Nicole Hong at
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