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Banks reportedly discuss Argentina default exit

A man slept in a containerin the financial district in Buenos Aires. A default could worsen the recession in Argentina.

Rodrigo Abd/Associated Press

A man slept in a containerin the financial district in Buenos Aires. A default could worsen the recession in Argentina.

BUENOS AIRES — Several international banks were reportedly in talks Monday that could end the legal battle that pushed Argentina into a default that threatens its economy.

The banks are said to be negotiating to buy some of the Argentine bonds held by US investors whose demand for a higher payment from the government led to a bruising court battle.

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That court battle ended with a US judge blocking Argentina’s interest payments to other bondholders, triggering a default on July 30.

A bank buyout may allow Argentina to exit default before it is pushed deeper into recession or it faces other potentially severe economic consequences.

The negotiations were reported Monday by Argentine financial paper Ambito Financiero and other media. The banks are said to include J.P. Morgan, Citibank, HSBC, and Deutsche Bank. All declined to comment.

Argentine officials have said they do not oppose a private bank resolution to the situation, but Ambito Financiero reported that the government was not part of the negotiations with the international institutions for legal reasons.

The holdout investors, led by New York-based hedge fund NML Capital Ltd., are seeking $1.5 billion for bonds defaulted on by Argentina in 2001. The country settled with most of its creditors, but the holdout investors refused to accept the lower payments. The government has said it cannot now settle with the holdouts without offering similar terms to the others.

Ambito Financiera, which cited an unnamed source close to the negotiations, said the international banks would need some type of guarantee that they would be able to recover their investment in the holdout bonds.

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