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Reports: Banks Negotiating with Argentine Debt Holdouts

Axel Kicillof, Argentina's economy minister, addresses member of the news media after a negotiation session at the Argentinean Consulate in New York, July 30, 2014.

A group of banks may be about to buy some of the Argentine bonds owned by a group of creditors demanding repayment in full on their $1.5 billion stash of Argentine debt.

A lawsuit brought by New York-based hedge fund NML Capital Ltd. prevented Argentina from making a scheduled $539 million debt payment last week to some of its bondholders. That forced the country to default on July 30.

Reports on Monday were that several banks, including J.P. Morgan, Citibank and HSBC, were negotiating to buy at least some of the Argentine debt from the creditor holdouts led by NML Capital.

The bonds in question were defaulted on in 2001, but not all bondholders accepted the 30 cents on the dollar restructuring. NML Capital, for example, won lawsuits in 2005 and 2010 on the restructuring.

U.S. federal judge Thomas Griesa last Thursday said Argentina could not pay some bondholders and not others, forcing the bank to default.

Argentina officials have denied that the country has defaulted on its debt for the second time in 13 years. They say the money was there ready to be distributed, but a federal judge in the U.S. prevented that from happening.

Last week, U.S. credit rating agency Standard & Poor’s downgraded Argentina’s credit rating.

Some information for this report comes from AP, AFP and Reuters.