Fears of new Argentinian default
ARGENTINA'S debt insurance costs and bond yields soared after a US appeals court hearing intensified fears that the country is heading for its second default in little over a decade.
Argentina's lawyers faced tough questions during Wednesday's hearing, the latest in a long-running battle between the country and 'holdout' investors who rejected two exchanges of defaulted bonds to seek full repayment in the courts.
"The consensus from all the analyses of yesterday's hearing is that the ruling will go against Argentina and exchange bond-holders and that is the main takeaway ... that this is headed for technical default," said Kevin Daly, a portfolio manager at Aberdeen Asset Management in London.
It is not clear when the US appeals court will give its verdict on whether to uphold an order for Argentina to pay some $1.3bn to the holdouts at the same time it repays creditors who took a steep haircut on their bonds in the two debt swaps.
That has raised fears of a default on the $24bn worth of restructured bonds because Argentina's fiery left-leaning president, Cristina Fernandez, has repeatedly refused to pay the holdouts, which she calls "vulture funds".