(Reuters) - Argentina came out swinging on Wednesday against the U.S. judge overseeing its debt default case, defying a threatened contempt order and dashing market hopes it might soon restart talks with the hedge funds suing the country.
A group of holdout investors have gone to court for full repayment on sovereign bonds that went into default in 2002. The funds rejected debt restructurings in 2005 and 2010, holding out for better terms.
U.S. District Court Judge Thomas Griesa, who has presided over the long-running legal battle, said on Friday he would issue a contempt order unless Argentina stopped claiming it had met its obligations and was not in default.
Far from backing off, Cabinet Chief Jorge Capitanich said Griesa had not grasped the case's complexities and that no new talks had been scheduled with the hedge funds.
"The proper conditions do not exist to negotiate," Capitanich told reporters in Buenos Aires. In 2012, Griesa ordered Argentina to pay a group of holdout hedge funds led by Elliott Management Corp and Aurelius Capital Ltd. $1.33 billion plus interest and barred it from repaying the holders of exchanged debt without paying the holdouts too.
In June, Argentina deposited $539 million into the account of an intermediary bank to make a June 30 coupon payment. Griesa ruled the deposit illegal and ordered the money frozen.
As a result, Argentina effectively missed the coupon payment and a committee facilitated by the International Swaps and Derivatives Association (ISDA) declared it a "credit event" ISDA on Wednesday held a conference call to discuss the next steps on settling credit default swap contracts on Argentine debt.
The committee was expected to announce its auction date and list of deliverable obligations later on Wednesday. Holders of the restructured bonds have asked Griesa to allow Bank of New York Mellon to release the money so they can get paid, and Capitanich criticized the judge for not acting on those requests.
"His lack of decision clearly comes from not understanding the process, not understanding Argentina's status as a sovereign country," Capitanich said. Argentina refers to the funds as "vultures" out to wreck the country's finances in their pursuit of huge profits.
Economy Minister Axel Kicillof on Tuesday posted a drawing on his Facebook page of a beady-eyed vulture wearing a shirt with the letters "U.S.A." and emblazoned with the U.S. flag. Next to the drawing are written the words "greed" and "cruelty".
With no negotiations scheduled, the case is in limbo while international banks struggle to reach a deal to buy some of the debt held by the holdouts.
The Argentine peso fell 1.15 percent to 13.01 per U.S. dollar in black market trading on Monday. Traders said the currency was pressured lower by pessimism over possible talks between Argentina and the holdout hedge funds.
reuters.com
A group of holdout investors have gone to court for full repayment on sovereign bonds that went into default in 2002. The funds rejected debt restructurings in 2005 and 2010, holding out for better terms.
U.S. District Court Judge Thomas Griesa, who has presided over the long-running legal battle, said on Friday he would issue a contempt order unless Argentina stopped claiming it had met its obligations and was not in default.
Far from backing off, Cabinet Chief Jorge Capitanich said Griesa had not grasped the case's complexities and that no new talks had been scheduled with the hedge funds.
"The proper conditions do not exist to negotiate," Capitanich told reporters in Buenos Aires. In 2012, Griesa ordered Argentina to pay a group of holdout hedge funds led by Elliott Management Corp and Aurelius Capital Ltd. $1.33 billion plus interest and barred it from repaying the holders of exchanged debt without paying the holdouts too.
In June, Argentina deposited $539 million into the account of an intermediary bank to make a June 30 coupon payment. Griesa ruled the deposit illegal and ordered the money frozen.
As a result, Argentina effectively missed the coupon payment and a committee facilitated by the International Swaps and Derivatives Association (ISDA) declared it a "credit event" ISDA on Wednesday held a conference call to discuss the next steps on settling credit default swap contracts on Argentine debt.
The committee was expected to announce its auction date and list of deliverable obligations later on Wednesday. Holders of the restructured bonds have asked Griesa to allow Bank of New York Mellon to release the money so they can get paid, and Capitanich criticized the judge for not acting on those requests.
"His lack of decision clearly comes from not understanding the process, not understanding Argentina's status as a sovereign country," Capitanich said. Argentina refers to the funds as "vultures" out to wreck the country's finances in their pursuit of huge profits.
Economy Minister Axel Kicillof on Tuesday posted a drawing on his Facebook page of a beady-eyed vulture wearing a shirt with the letters "U.S.A." and emblazoned with the U.S. flag. Next to the drawing are written the words "greed" and "cruelty".
With no negotiations scheduled, the case is in limbo while international banks struggle to reach a deal to buy some of the debt held by the holdouts.
The Argentine peso fell 1.15 percent to 13.01 per U.S. dollar in black market trading on Monday. Traders said the currency was pressured lower by pessimism over possible talks between Argentina and the holdout hedge funds.
reuters.com
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