Banks reportedly discuss Argentina default exit

A woman walks by a graffiti that reads in Spanish "homeland or vultures", in reference to the dispute between the Argentine government and a U.S. hedge fund, known locally as "vulture funds," in Buenos Aires, Argentina, Monday, Augsut 4, 2014. The collapse of talks with U.S. creditors sent Argentina into its second debt default in 13 years and raised questions about what comes next for financial markets and the South American nation's staggering economy. (AP Photo/Victor R. Caivano)

A woman walks by a graffiti that reads in Spanish "Vultures," in reference to the dispute between the Argentine government and a U.S. hedge fund, known locally as "vulture funds," in Buenos Aires, Argentina, Monday, August 4, 2014. The full graffiti reads "out vultures." The collapse of talks with U.S. creditors sent Argentina into its second debt default in 13 years and raised questions about what comes next for financial markets and the South American nation's staggering economy. (AP Photo/Victor R. Caivano)

BUENOS AIRES, Argentina (AP) — Several international banks were reportedly in talks Monday that could end the legal battle that pushed Argentina into a default that threatens its economy.

The banks are said to be negotiating to buy some of the Argentine bonds held by U.S. investors whose demand for a higher payment from the government led to a bruising court battle.

That court battle ended with a U.S. judge blocking Argentina’s interest payments to other bondholders, triggering a default on July 30.

A bank buyout may allow Argentina to exit default before it is pushed deeper into recession or it faces other potentially severe economic consequences.

The negotiations were reported Monday by Argentine financial paper Ambito Financiero and other media. The banks are said to include J.P. Morgan and Citibank and HSBC and Deutschebank. All declined comment.

Argentine officials have said they do not oppose a private bank resolution to the situation but Ambito Financiero reported that the government was not part of the negotiations with the international institutions for legal reasons.

The holdout investors, led by New York-based hedge fund NML Capital Ltd., are seeking $1.5 billion for bonds defaulted on by Argentina in 2001. The country settled with most of its creditors but the holdout investors refused to accept the lower payments. The government has said it cannot now settle with the holdouts without offering similar terms to the others.

Ambito Financiera, which cited an unnamed source close to the negotiations, said the international banks would need some type of guarantee that they would be able to recover their investment in the holdout bonds.

Rate this article: 

No votes yet