The heated battle between Argentina and hedge fund titan Paul Singer shows no sign of cooling off.
Argentina is sending a delegation to New York on Monday to meet with a court-appointed mediator over its $1.65 billion dispute with Singer and other so-called “holdout” investors. But those talks aren’t expected to make much headway.
Axel Kicillof, Argentina’s firebrand economy minister, threw oil on the fire Thursday, telling the Organization of American States that US court rulings ordering it to pay Singer 100 percent of his claim are “absurd” and push the country “into a corner which makes it impossible for Argentina to pay.”
Argentina missed a June 30 bond payment to the restructured bondholders because it refused to follow a US court order to pay the holdouts face value at the same time. It has until July 30 to strike a deal or default.
The problem for Argentina is that the restructured bondholders who agreed to debt swaps worth 25 to 30 cents on the dollar could sue to get as much money as the holdouts.
Kicillof argued that following the US court’s orders would unleash some $132 billion in new claims — and another default.
“The fear is real,” said Diego Ferro of hedge fund Greylock Capital, an expert in sovereign-debt restructuring.
Most observers think that Argentina views an immediate default as worse than paying Singer, but it’s still a wild card.
“Argentina is torn; it wants to negotiate, but it hates the fact that it is receiving no sympathy,” Ferro said.