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Argentina defaults for second time

Sarah Marsh Buenos Aires

ARGENTINA has defaulted for the second time in 12 years after last-ditch talks with what it called “vulture” creditors failed, though debt insurance prices yesterday suggested investors believed a deal could be reached.

After a long legal battle with hedge funds that rejected the country’s debt restructuring following a 2002 default, Latin America’s third-biggest economy failed to strike a deal in time to meet a midnight payment deadline.

The immediate focus was on whether a group of big banks and funds overseen by the International Swaps and Derivatives Association would declare the situation a “credit event”.

Any such ruling would set off a series of insurance payments and give most of Argentina’s bondholders the right to demand their money back immediately. The deadline is August 4, according to analysts.

The cost of insuring its debt against default fell sharply yesterday, data provider Markit said, as investors speculated a deal could be struck, even if only in the long term. – Reuters

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