Date
22 November 2017
Traders work at the Buenos Aires Stock Exchange. Local markets were mixed on Monday as players waited for new signs of how soon Argentina might reach a deal with holdouts in order to exit default. Photo: Bloomberg
Traders work at the Buenos Aires Stock Exchange. Local markets were mixed on Monday as players waited for new signs of how soon Argentina might reach a deal with holdouts in order to exit default. Photo: Bloomberg

Argentina to probe holdout creditors for possible misconduct

Argentina’s market watchdog has launched an investigation into possible unlawful speculation by holdout creditors whose legal pressure for repayment of their defaulted bonds pushed the country into a new default last week, Reuters reported.

Securities Commission chief Alejandro Vanoli said on Monday his office has asked its US counterpart for information on trade of Argentina’s sovereign debt and credit default swaps (CDS), derivatives used to insure against default, according to the news agency.

The regulator wanted to check if holdouts who rejected Argentina’s restructuring in the wake of its 2002 default held or traded CDS while taking part in negotiations with the country which could trigger a default.

“The use of insider information, which would be the case here, and market manipulation are crimes in Argentina, they are crimes in the United States, and they imply economic sanctions and eventually criminal sanctions,” Vanoli was quoted as saying at a news conference.

Local markets were mixed on Monday as players waited for new signs of how soon Argentina might reach a deal with holdouts in order to exit default. Argentine bonds fell slightly while the Merval stock index flickered up and down.

Argentina missed a deadline at midnight last Wednesday to make a coupon payment on a restructured bond after failing to reach a deal with holdouts. A US court had ruled Argentina could only service its exchange bonds if it paid holdouts their defaulted debt in full.

US District Judge Thomas Griesa said last week Argentina must continue negotiations with mediator Daniel Pollack to reach a deal with holdouts.

But Argentina’s Cabinet Chief Jorge Capitanich on Monday reiterated the government’s criticism of the lawyer. “We consider he has been incompetent.. that he has been manifestly partial and definitively does not fulfill the role a mediator should,” Capitanich told reporters.

This default strikes a contrast to the last one in 2002, which occurred during an economic and financial meltdown that plunged millions into poverty and saw dozens killed in riots.

While Latin America’s third largest economy entered a mild recession at the start of 2014, its banks are sturdy, the state is solvent and the streets of Buenos Aires are calm, the report said.

Underscoring the fact it is willing to pay its debts, Argentina said last week it had made the first payment of its debt arrears to the Paris Club of major creditor nations under an agreement struck earlier this year.

The club said on Monday it had received the US$642 million tranche “as scheduled”.

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CG

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