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Argentina may default on 3b imf debt Original Source Link: (May no longer be active)
http://quote.bloomberg.com/apps/news?pid=10000086&sid=azvFJ.yoUJRg&refer=latin_americahttp://quote.bloomberg.com/apps/news?pid=10000086&sid=azvFJ.yoUJRg&refer=latin_america
Argentina May Default on $3.1 Billion IMF Debt Today (Update3)
March 9 (Bloomberg) -- Argentina today may miss a $3.1 billion loan payment to the International Monetary Fund, two years after it defaulted on $99 billion of bonds.
President Nestor Kirchner has said he won't make the payment unless he gets assurances from the IMF that it would free this month a $3.1 billion loan to the nation, South America's second- biggest economy. The payment is equivalent to 20 percent of Argentina's $15 billion of foreign reserves.
Failure to pay the IMF would place Argentina with such nations as Sudan and Liberia, limiting the prospects of further assistance from intergovernmental organizations and reducing the chances of negotiations with investors, who have waited more than two years for a restructuring agreement.
``Argentina is isolating itself from the world,'' said Mauro Sandri, an Italian lawyer who helped set up the Argentine Creditors group in Rome, which represents 270,000 individual investors. The group is attempting to seize Argentine property and funds in Italy worth about $93 million, Sandri said. ``They are sliding into the ridiculous.''
Argentina was late in September on a $2.9 billion payment to the IMF. It made the payment after the fund committed to the new loan accord.
``I don't expect agreement today but it will probably be settled over the next few weeks,'' said Edwin Gutierrez, who helps manage $1.5 billion of emerging-market debt, including about $50 million of Argentine government bonds, at Deutsche Asset Management in London. ``Argentina won't want to join the ranks of those pariah states.''
The country's most-traded defaulted security, the 7 percent bond due 2008, fell 0.85 cent on the dollar to 27.75, raising the yield to 69 percent, according to J.P. Morgan Chase & Co. at 7:26 a.m. New York time.
Scenarios
``Kirchner is getting too tough,'' said Silvia Marengo, who sold her last holdings of Argentine sovereign bonds about 10 days ago out of the $210 million of debt assets she manages at Clariden Bank in Zurich, a unit of Credit Suisse Group. ``I've just got fed up of waiting for the restructuring.''
The IMF, which said it will make a decision on Argentina this month, has said the country needs to make further progress in restructuring the defaulted bonds. The country met its quarterly budget targets set in the $13.3 billion loan accord, the fund has said.
``A delayed payment by Argentina, as occurred last September, is possible as negotiations appear to be ongoing,'' said Vladimir Werning, chief economist at J.P. Morgan Chase & Co. Buenos Aires, in an e-mailed report. ``However, we don't consider that such a possibility would lead to a breakdown in relations with the IMF, as negotiations would continue.''
Demands
Argentina still hasn't accepted IMF demands for direct talks with the Global Committee of Argentina Bondholders, a representative group, Werning said.
Argentina offered in September during an IMF meeting in Dubai to repay $250 per each $1,000 in defaulted bonds. The offer, which does not include recognition of past due interest and extends maturities on some bonds up to 42 years, amounts to recouping about 10 cents on the dollar, said economists such as Daniel Marx, a former Argentine finance secretary.
Kirchner has said the government will ignore ``arm- twisting'' by special interest groups seeking to get it to improve its offer.
``Despite Kirchner's tough rhetoric, I believe he will negotiate to the end to get the IMF aid agreement back on track,'' said Jorge Todesca, who was Argentina's vice economy minister in 2002 and now runs a research consultancy in Buenos Aires. ``Argentina needs that support and Kirchner knows it.''
To contact the reporters on this story:
Daniel Helft at dhelft@bloomberg.net;
Gavin Serkin at gserkin@bloomberg.net
To contact the editor for this story:
Laura Zelenko at lzelenko@bloomberg.net
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