The price of insuring Argentina’s bonds jumped as investors bet on whether the South American country was headed for another default.
The yearly cost to insure the debt in the credit default swaps market for five years jumped by nearly 10 percent yesterday after President Cristina Kirchner and her government refused to come up with a better offer for bondholders led by hedge fund billionaire Paul Singer’s Elliott Management.
A New York appeals court is expected to rule that Argentina must pay the Elliott group $1.44 billion, and its latest proposal indicated that it will not, which could push its bonds into default.
Argentina was supposed to outline how it planned to make the payout by last Friday’s deadline. But Argentina refused to budge and offered the holdout group the same deal other bondholders accepted in 2010.
Argentine bonds also fell 1 to 1.5 points, to close at 52.55 in thin trading.
“Most investors had already placed their bets,” said Andrey Popel of Greylock Capital.