Argentina says “impossible” to avoid default
Judge Thomas Griesa’s decision not to freeze his ruling against Argentina is pushing the country to default, sovereign says
Argentina said on Tuesday it would be "impossible" to avoid
a default after Judge Thomas Griesa declined to postpone effect
of a ruling that calls for a $1.5bn payment to holdout
creditors led by NML Capital. undefined
Griesa said he did not consider that the stay would help the
parties to reach an agreement. Instead he ordered them to hold
||Source: Jorge Gobbi
It will be "impossible" to reach a deal with NML Capital
before July 30, when Argentina will be declared in default for
failing to pay the holders of restructured bonds, attorney
Jonathan Blackman, who represented Argentina in the hearing,
was reported as saying by state-run news agency Telam.
Griesa's order means that Argentina and NML are set to meet at
the negotiating table this week. It will be the first official
meeting between the two parties since the US Supreme Court
upheld the ruling against the country in late June.
"We are prepared to do as the judge asked and meet
continuously with Argentina and the Special Master to resolve
this dispute. We are confident this matter could be resolved
quickly if Argentina would join us in settlement
discussions," an NML spokesman said in a statement.
However, analysts said the default is still a likely
outcome. Argentine CDS widened further on Tuesday, trading at
upfront levels of 37 after a steady rise from a recent low of
21 earlier this month.
"Judge Griesa's refusal today to grant the Argentine
government a stay in the ongoing debt dispute means that it
is increasingly likely that the authorities will default on
30th July. Default is another headwind that will prevent a
quick recovery from the ongoing recession," Capital Economics
analysts said in a note.
"But the good news is that a meltdown akin to that in
2002, when GDP contracted by almost 11%, seems unlikely."
Even if Argentina is in better economic shape than when it
last defaulted, a new default would have a lasting impact on
the country's ailing economy, said Claudio Loser, who heads
the Centennial Group Latin America.
"If no agreement is reached and there is a default, some
people would say that when there is a new government by the
end of next year, things would move … But that would
take time, and the damage of not finding a solution now will
continue through certainly the early part of any new
government," he said in a media call on Monday.