Holdout investors in Argentine sovereign debt said on Tuesday they would discuss an accommodation to let the government pay other bondholders facing a potential default, if negotiations to settle the legal dispute have made good progress before July 30.
Lawyers representing the holdout investors, led by Elliott Management's NML Capital and Aurelius Capital Management, also said in a letter to U.S. District Judge Thomas Griesa there were no grounds to grant Argentina's request to reinstate a suspension of his order to make payment.
A bond payment of $900 million is due next Monday to investors who participated in two prior restructurings on the same terms in 2005 and 2010. There is a 30-day grace period before an actual default can be declared if there is no payment.
"If as July 30 approaches the parties have made good progress but more time is needed, and Argentina has not taken action to evade the Amended February 23 orders, Argentina and the Plaintiffs will both have a strong motivation to work out a consensual accommodation, on mutually agreeable terms,'' Robert Cohen of Dechert, lead counsel to the holdouts, said in the letter to Griesa.
Cohen went on to say this would allow the settlement process to continue, allow Argentina to make the payment to exchange bondholders within the grace period and give his clients protections and compensation for the risk that the settlement effort fails after Argentina makes its payment.
Argentina's lawyers on Monday asked Griesa to suspend his order, which would force the nation to either pay holdouts at the same time it makes a payment on restructured debt or be barred from paying anyone—thereby creating a technical default even though it has the cash to cover its debt.
Griesa's order was upheld after the U.S. Supreme Court on June 16 denied the government's request to hear an appeal on the injunction put on financial institutions from transferring payments by the government through the U.S. banking system.
The plaintiffs, who have waged battle with Argentina in the New York courts, won a 2012 judgment for $1.33 billion. They claim in the letter to Griesa that with past due interest, the award would be approximately $1.65 billion by June 30.