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Argentine Credit Default Swaps Fall After Bondholders File Brief

November 19, 2012

The cost to protect Argentine bonds against default fell for the first time in eight days after bondholders of restructured debt argued in support of the government in its legal battle with holdouts.

Five-year credit default swaps fell 312 basis points to 2,797 basis points at 12:06 p.m. in New York, according to data compiled by Bloomberg. That’s the biggest drop on a closing basis since June 2009. One-year swaps plunged 538 basis points to 6,918.

A group of creditors who accepted the terms of Argentina’s 2005 and 2010 debt restructuring, including Gramercy Advisors LLC and Massachusetts Financial Services Co., asked a New York court to “recognize the serious harm” they face from an Oct. 26 court decision that Argentina can’t pay the so-called exchange bondholder group, or EBG, without paying holders of defaulted debt.

“The injunction threatens to magnify the losses of these guiltless third-parties by making it impossible for them to receive payments that everyone agrees are lawfully owed,” the group said in a brief filed Nov. 16. The decision “threatens to deprive the EBG members of their Due Process rights.”

The yields on Argentina’s 8.75 percent dollar bonds due in 2017 sold under New York law as part of the restructuring fell 146 basis points, or 1.46 percentage point, to 16.35 percent at 12:06 p.m., according to data compiled by Bloomberg. The bond’s price surged 3.73 cents to 76.34 cents on the dollar.

To contact the reporter on this story: Katia Porzecanski in New York at

To contact the editor responsible for this story: David Papadopoulos at

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