Argentina hours away from bond default

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Argentina’s economy minister is expected to return to the negotiating table on Wednesday in a last-ditch attempt to prevent the country defaulting on its bonds.

Axel Kicillof’s talks with “hold-out” investors ended late on Tuesday night in New York without agreement.

They are demanding a full pay-out of $1.3bn (£766m) on the bonds they hold.

A US judge has ruled that the “hold-outs” must be paid by Wednesday night if no deal is agreed.

But thousands of miles away in Buenos Aires, many are sceptical that there can be any agreement.

The government’s rhetoric has been clear.

The “hold-outs” are US hedge funds that bought debt on the cheap during Argentina’s darkest hours and never agreed to restructuring.

President Cristina Fernandez de Kirchner calls them vultures, accusing them of taking advantage of Argentina’s debt problems to make a big profit.

What makes the problem worse is that if the “hold-outs” get their way, other bondholders who agreed to take cuts of up to 70% in what they are owed may also demand full repayment.

Ask people on the street about their view on Argentina’s debt troubles and most admit it is too complicated for them to understand.

But the two words they do know are “fondos buitres” – “vulture funds” in Spanish.

Despite the defiant tone of the government, many people seem resigned. Argentina has defaulted before and it will do it again.

I met Carina Etchegaray, the mother of two children aged 14 and 16.

When Argentina last defaulted at the end of 2001, she lost huge amounts of savings.

She had wanted to buy a house for her young family. But at the end of 2001, the government introduced what was known as the “corralito”. It literally means a small enclosure in Spanish, but refers to when the government partially froze bank accounts and people were stopped from taking money out.

“When we finally had the money, because of devaluation, we could only buy a car for the same quantity of money we had for a house,” she says.

But she is also practical.

“We live with this shadow of crisis. You have to continue with your life because you have children and have to work.

“You have to adapt – in this country, it’s the way of life.”

And that is what entrepreneur Federico Dumas is doing too – but not in the way that Argentina would hope.

He has a software company, but says he is not investing as he would like to.

“I’m afraid of everything and my customers are not willing to invest, so that will affect my business,” he says, adding that he is hopeful Argentina’s problems will be solved reasonably.

“But if the country goes into default, I’m very afraid of what’s going to happen to my business and my employees.”

Source: BBC

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