Argentina Debt Meeting Delayed

Jul 24 2014 | 10:00am ET

Distance has forced another delay in talks to avert an Argentina default next week.

The court-appointed mediator in the case, Daniel Pollack, was to begin holding “continuous” meetings with Argentina and hedge-fund holdouts from its 2001 default yesterday morning. But the special master postponed the meetings until today at noon, because Argentina’s delegation “could not get here in time.”

Today’s sit down will be Argentina’s third with Pollack since his appointment earlier this month. The country has yet to meet directly with the holdouts, led by Elliott Management and Aurelius Capital Management, and has insisted that it be permitted to pay holders of its restructured debt during negotiations.

U.S. District Judge Thomas Griesa on Tuesday rejected Argentina’s latest bid for a stay, putting it on course to default on July 30. The country missed a $539 million payment on June 30, kicking off a 30-day grace period.

Griesa has ruled that Argentina must pay the hedge funds about $1.5 billion if it wishes to continue servicing its performing debt. The country has refused to pay the holdouts, which it calls vultures, and has argued that it does not have enough time to reach a global settlement with all creditors before the deadline.

The country also claims that it will not be in default on Wednesday because it deposited the money to make the bond payment with the Bank of New York Mellon, in defiance of Griesa’s orders.

Argentina complained yesterday that Tuesday’s hearing before Griesa “did not solve anything.”

“Griesa summoned banks, bondholders and government lawyers but left everything in suspense, threatening the Argentine Republic with what he insists on calling a default,” Argentina’s Economy Ministry said. “Default means not being able to pay. Argentina pays. The money deposited cannot be blocked because it belongs to bondholders. The judge must let bondholders collect their money.”

Griesa made clear yesterday that he had no intention of doing so unless Argentina strikes a deal with the hedge funds. He also directed BNY Mellon to negotiate with the holdouts about what to do with the money; the bank wishes to hold onto it to minimize its own legal liability.

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