There's A Big Rumor Going Around About How Argentina Can Be Rescued
REUTERS
Remember: A country has never chosen to default before.
The biggest rumor going around right now is a good one for Argentina. The word is that private banks including JP Morgan, HSBC, and Citigroup are in negotiations to buy over $1.3 billion in debt from NML Capital, the group of investors that have sued the country for about a decade.
JP Morgan has declined to comment on the matter.
The story was first reported in Argentine newspaper Ambito, and contained no citation. Meanwhile, Argentine bonds have ended their two-day rally and headed downward. The Merval, the country's stock market, is down more than 9%.
Last night, Argentina's Economy Minster announced that negotiations to resolve a dispute with NML Capital over debt dating back to the country's last 2001 default had collapsed. As a result, the country could not make a payment to any of the bondholders of its 2033 sovereign debt, and entered into what Standard and Poors called a "selective default," and what the U.S. Court appointed mediator Daniel Pollack called a "technical default."
A body called The ISDA Credit Derivatives Determinations Committee, in Washington D.C., will decide whether country entered default officially.
Argentina, for its part, insists that it is not in default because it attempted to pay some of its 2033 bondholders. However the Court, ruling that The Republic could not favor bondholders who took a haircut on that debt - exchange bondholders - over the 3% that had not - NML Capital - sent that payment back to Argentina.
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