Kevin Sullivan, US interim ambassador in Argentina affirmed on Thursday that the country must seek “practical solutions” with the 'holdouts' or the so called vulture funds over defaulted bonds.
“We know there have been several proposals over the table and we think it is important for Argentina to evaluate the risks, the possible solutions and choose one to be implemented,” Sullivan said, while emphasizing “the most important thing now is to look out for practical solutions.”
According to the embassy’s business adviser “there are still possibilities to achieve an agreement.”
The US official also highlighted some measures taken by President Cristina Fernandez administration during the last months such as the solution with ”the International Centre for Settlement of Investment Disputes (ICSID), the improvement of the official statistics system, and the debt deal signed with the Paris Club.”
The acting ambassador statement followed on reports earlier in the day from Dow Jones that JPMorgan was discussing buying Argentina’s sovereign debt from 'holdout' funds suing the country over its defaulted bonds.
“Fluid” was how the US agency described talks between JPMorgan and hedge funds.
So far it has been confirmed that a group of foreign private banks were resuming talks on Thursday following Wednesday's failure in negotiations between the federal government and holdout creditors.
The move involves a 1.4 billion dollar offer to holdout funds suing Argentina over its defaulted bonds. Allegedly creditors were pushing for collecting payment now of 250 million and the rest in other payments.
Argentina’s ADEBA group of national banks also attempted to reach an agreement with holdout funds but failed as well. Apparently the Argentine government holds stock and members at the board of directors of some of the banks and financial institutions involved.
This was immediately ruled out since it would immediately trigger the RUFO clause.
Meanwhile the Italian bondholders' legal representative Tullio Zembo said that the alleged agreement private banks and holdouts are currently working on would trigger the Rights Upon Future Offers (RUFO) clause.
“I do not understand what is the plan of the banks, because this would trigger the RUFO [clause]. The Economy Minister [Axel Kicillof] said so yesterday: 'please, do not help us because it makes the situation worse',” Zembo said in a radio interview.
The representative of restructured Italian bondholders said that an agreement with private agents would trigger the clause just as a deal between the government and the holdouts would. “They need to forget about any talks until January 2015,” he said referring to when the clause expires.
“The drama of a default is when the debtor is on its knees and cannot pay, that would be a problem,” Zembo added in a more optimistic approach, saying that is not Argentina’s situation at the moment.