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Talks to end Argentina default apparently collapse
Buenos Aires, Argentina • Negotiations have apparently ended without success on a private-sector deal to end the legal battle that forced Argentina into default last month for the second time in 13 years.
Aurelius Capital Management LP said it had been in talks with private parties to sell its Argentine bonds at the heart of the dispute, but the offered payments were not even "remotely acceptable," to the U.S.-based investment fund.
"That engagement has convinced us that there is no realistic prospect of a private solution," Aurelius said in a statement issued late Wednesday that did not disclose the details of the proposals, nor the participants.
Argentina was forced into a default July 30 by its decade-long legal battle with Aurelius and other U.S. investors who refused to accept lower payments for bonds that the South American country defaulted on in 2001.
The investors obtained a U.S. court order, upheld by the Supreme Court, preventing Argentina from making a $539 million interest payment on July 30, triggering a second default by the country. Analysts have warned that the default could derail an already weak Argentine economy.
Argentina has said it cannot pay the approximately $1.5 billion sought by the holdout investors without offering the same terms to investors who previously accepted lower payments, at least not until next year when a clause requiring equal treatment expires. The Argentine government says it is not really in default, since it made the interest payment but the bank was prevented from distributing the money.
Argentine media have reported that local and multi-national banks have been in negotiations to buy the debt from the holdouts but none of the alleged participants have confirmed the talks or been willing to publicly discuss the details. Aurelius said that the entities making the proposals "were not prepared to fund more than a small part, if any, of the payments they wanted us to accept."