While last night saw ‘The Holdouts’ and ‘The Argentina Delegation’ come face-to-face for the first time in a decade for negotiations, when they went to bed late last night, there was no resolution. No news yet this morning of when the meeting will reconvene but it appears market participants are hopeful… The Argentina 2033 bonds are exploding higher. ARG 2033s are up over 10 points to a record-high price of 97.50. Let’s hope they are not disappointed at the hopes for a bank bailout. Of course, we saw this kind of exuberant jump right after the initial pro-holdouts ruling drop…
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This is what is driving the rally:
Members of Argentina’s banking association, known as Adeba, are working on a last-minute plan to help the country avoid default, according to people familiar with the matter.
The bankers association’s plan, which hasn’t been completely hashed out among the banks, would entail buying the legal claim and paying off the holdout creditors who are suing Argentina in U.S. courts for full payment on bonds the country defaulted on in 2001.
In exchange, the banks would ask the holdouts to ask U.S. District Judge Thomas Griesa, whose ruling has barred Argentina from paying its restructured bondholders unless it pays off the holdouts, to suspend his ruling.
Another person said the idea is for the banks to buy the government’s claim in three cash installments. In exchange, the banks would ask the government to pay them back in bonds beginning in January, when a key clause in the case expires.
