Don’t expect Argentina President Cristina Kirchner to order her Economy Minister, Axel Kicillof, back to the negotiating table in New York anytime soon.
Despite the fact the embattled country defaulted on some $13 billion in sovereign debt Wednesday and that $1 billion worth of credit-default swaps were declared triggered by the International Association of Swaps Dealers on Friday, there has been little downside to the financial events.
And some feel the cure to the default — pushing for an “acceleration” payment on the defaulted bonds — is worse than the disease.
Which means the country, the exchange bondholders — who did not get the $539 million interest payment on June 30 they are entitled to — and Paul Singer, who won the right to collect on his share of $1.65 billion in holdout bonds, could be stuck in this purgatory-like holding pattern for a while.
Pushing Argentina to pay Singer and the other holdouts will force the country to face about $20 billion in claims similar to Singer’s — including two new cases brought this week, its lawyer said in court Friday.
Another $120 billion could be demanded if Argentina doesn’t get other bondholders to waive a clause that would give them the same money as Singer.
Behind the scenes, Citigroup and JPMorgan Chase are reportedly in talks to buy the defaulted bonds that Singer and other creditors own.
Such a deal could remedy the default.
But the waters are still murky, and Argentina has continued its intransigence via a message the country sent to Manhattan federal court Judge Thomas Griesa through its lawyer.
Argentina believes Griesa’s court-appointed mediator, Daniel Pollack, is biased against it and wants him fired.
Argentina no longer has “confidence in the process as conducted by the special master,” said Jonathan Blackman of Cleary Gottlieb.
Griesa had ordered a mediator, or “special master,” to help bring Argentina and Singer together through settlement talks.
At Friday’s hearing, Griesa ordered the parties to try again.
“Let’s get back to work,” he said.