NEW YORK, June 24: A US judge appointed a Manhattan attorney to supervise talks between Argentina and hedge fund bondholders as Buenos Aires seeks to avoid defaulting on its debt in a week’s time.
New York district court judge Thomas Griesa yesterday named the mediator after the government of President Cristina Kirchner asked him to organize negotiations with its creditors.
The move raised hopes that a deal could be done before a June 30 deadline for Buenos Aires to pay back possibly billions of dollars to creditors, a week after the US Supreme Court turned down the country’s last-ditch appeal against bondholders it labels “vultures”.
Buenos Aires had warned that the court decision put it in the position of defaulting on its debt for the second time in 13 years.
The news of impending negotiations sent Argentine stocks soaring, with the Merval 25 index adding nearly 9 per cent.
Griesa named Daniel Pollack as “special master to conduct and preside over settlement negotiations” in the case, which pits Argentina against hedge funds who refused to take part in a restructuring of the debt on which Buenos Aires defaulted in 2001.
Pollack is an attorney with the McCarter & English law firm, and specializes in financial litigation.
Griesa’s order says that Pollack may conduct talks in public or in private, and that both parties are to offer him their “full cooperation.”
Last week, Argentina lost a Supreme Court challenge to a 2012 ruling by Griesa, meaning the country must pay the hedge funds — “holdouts” from its 2005 and 2010 debt restructuring — the full value of their bonds at the time it makes its next regular debt payment, scheduled for the end of this month.
While the two funds which sued Argentina in the case, NML Capital and Aurelius Management, hold about USD 1.3 billion worth of bonds, Argentina says the court decision would force it to pay all holdouts, more than USD 15 billion.
That is more than half of the country’s foreign exchange reserves. If indeed it does have to pay all of that on June 30, the Argentine government says it would have to default.
“In this context, we are seeking conditions for negotiation that are just and equitable for 100 per cent of the bondholders,” Kirchner’s cabinet chief Jorge Capitanich said yesterday.
In addition to asking Griesa to help organize negotiations, economy Minister Axel Kicillof said the country was asking for him to place a stay on implementing the court decision, which would give the talks more time. (AGENCIES)
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