Argentina risks default as set to miss bond payment

Argentine protesters in Buenos Aires, 20 June 2014 "Argentina or vulture funds": the anti-hedge fund mood on the streets of Buenos Aires

Related Stories

Argentina is expected to miss a bond interest payment on Monday that will risk sending the country into default.

If it does, the country then has a 30-day grace period to make the payment to avoid its second default in 13 years.

Argentina owes money to two sets of bondholders - those who have agreed a deal to restructure its debt, and hedge funds which want full settlement of the debt.

US courts have ruled Argentina cannot pay one group unless it pays the other.

The hedge funds - dubbed "vulture funds" because they bought Argentine government bonds at a big discount after the country's 2001 default - say the country is now refusing to negotiate.

"Argentina's government has chosen to put the country on the brink of default. We sincerely hope it reconsiders this dead-end path," wrote Jay Newman, senior portfolio manager at Elliott Management, which runs NML Capital, one of the bond holders which wants a full settlement.

Default

Last week, Argentina tried to make a payment to the individual bond holders who had agreed a deal.

But on Friday a US judge ruled that this attempt was "illegal" and said the money should be returned. The judge said Argentina was not allowed to make payments to one group of creditors unless it also paid the other.

Earlier this month, the US Supreme Court ruled that Argentina must pay the hedge funds that had refused to participate in the debt restructuring deal the full $1.3bn (£766m) value of the debt.

The Argentine government has been in a 12-year legal battle in US courts, arguing that the hedge funds are engaging in blatant profiteering.

More on This Story

Related Stories

More Business stories

RSS

Features

From BBC Capital

Programmes

  • A digger operated via an Oculus Rift and a controllerClick Watch

    Why controlling a heavy digger with a virtual reality helmet might improve safety

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.