Argentina seeks end to legal battle with creditors

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Argentina seeks end to legal battle with creditors

5:51 CAT | 13 Apr 2016

Argentina’s finance minister said on Tuesday he hoped the creditors who had reached deals with the government on defaulted debt would not back down, amid the concern that the country will not be able to meet the deadline for payment.

Argentina is seeking to end a legal battle with creditors over unpaid debt stemming from its record 2002 default that has kept it from accessing global capital markets.

Under an agreement with the main group of “holdout” bondholders, headed by hedge funds Elliott Management and Aurelius Capital, creditors can annul the deal if they are not paid by Thursday.

Argentina had expected to pay them with the proceeds of its first new bond in 15 years. However, it has been blocked from issuing the bond by a court hearing scheduled for Wednesday, making it tough to pay creditors on time.

“We have done all that we could,” Finance Minister Alfonso Prat-Gay told reporters in New York, where he is heading a roadshow for Argentina’s bond sale. “Now we just have to wait and hope that those who already agreed do not back out.”

Argentina settled with an additional creditor holding defaulted sovereign bonds for about $255m, Daniel Pollack, the court-appointed mediator in the long-running case, said in a statement later on Tuesday.

The US Court of Appeals will hold a hearing on Wednesday on the injunction that blocked Argentina from issuing new debt or paying bondholders who accepted its prior restructurings.

“I hope (the court) takes a decision as soon as possible,” Mr Prat-Gay said, adding that the investors he met in New York had been very optimistic about Argentina’s bond offering.

“There is optimism and a lot of interest, but of course … there are questions about how we are going to fix the fiscal accounts,” he said.

Argentina expects to raise as much as $15bn with its new bond and is targeting maturities of five, 10 and 30 years, a source who saw a finance ministry presentation told IFR, a Thomson Reuters publication.

Argentina’s new, business-friendly government is promising investors it will solve the country’s economic problems such as rampant inflation and a high fiscal deficit.

Mr Prat-Gay said on Tuesday he was sticking to its estimate for 2016 inflation of 25%, even though private economists are forecasting that consumer prices are likely to rise by at least 35% this year.

Argentina’s new government suspended the publication of national data when it took power last December while it revamped the statistics office to restore its credibility.

But the latest available data from Buenos Aires City shows that 12-month inflation jumped to 32.9% in February, with prices rising nearly 4.0% a month this year.

Mr Prat-Gay said this figure was skewed given that the capital was most affected by government cuts in subsidies for public services such as gas, electricity and transport. He added that inflation was likely to ease in the second half of the year to about 1% on the month.

Source: Reuters