NEW YORK: Argentine debt prices sank this week after arguments in a US court Wednesday appeared to put the sovereign at the losing end of its battle with holdouts and raised the prospects of a technical default in coming months.
"My read of the hearing is that Argentina got spanked, badly," said one legal academic present in what was described as a packed courtroom.
Boden 2015s ended the day Wednesday at 83.50 after trading at 88.80 the day before.
And while by Friday the bonds had recovered a touch the cost of paying for default protection had spiked considerably, with the five-year CDS being quoted at 3,629bp, according to one trader.
The ruling was designed to resolve two issues, namely to determine what the rateable formula should be to pay holdouts and whether third-party intermediaries such as the Bank of New York were bound by that injunction.
The three-judge panel's response to arguments over these points, and Argentina's defiance in the courtroom, left many analysts forecasting a negative outcome for the sovereign, though a final decision is not expected for at least another month.
Some are predicting that a final ruling may even come before the next bond payment on March 31, while Citigroup analysts believe April or May is more realistic.
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