Argentina Debt “Mediation” Goes Surreal As Neither Side Turns Up For Meeting, Black-Market Peso Tumbles

Despite Judge Griesa’s demands that the holdouts and the Argentinian government hold “continuous” mediation until the debt conflict is resolved “or fear the worst,” this morning’s headlines are somewhat surreal:

*NEITHER SIDE IN ARGENTINE DEBT CONFLICT HAS ARRIVED TO MEETING

Argentina decided not to send the economy minister (just a ‘delegation’) as BTG analysts warn that “all the music from the Argentine government indicates default,” and judging by the tumble in Argentina’s black-market Peso (Dolar Blue) the last few days, that risk is starting to rise.

As Bloomberg reports,

Neither Argentine govt delegation nor attorneys for the South American nation or holdout creditors had arrived at 10am meeting called with court-appointed mediator Daniel Pollack in Manhattan.

Pollack didn’t respond to e-mail seeking comment

Argentine Economy Minister Axel Kicillof wasn’t part of delegation that traveled to NY

“All the music from the Argentine government indicates default,” according to a BTG report (as Bloomberg annotates):

“It is not that much that they are myopic about the consequences of default. Rather it is fear of the legal consequences of the RUFO clause”

A deal shouldn’t trigger RUFO clause “but govt wants to be sure, and nobody could give that sort of assurance”

“In this circumstance Cristina Kirchner herself seemed to have taken the decision of not paying”

“Still we do not lose hope on a deal”

Incentives of all parties favor a deal

Analysts expect volatile environment until July 30

“We will not be sure about the outcome until the very last minute”

In case of default, economy will suffer scarcity of dollars, which may lead govt to restrict imports further, thus harming value chains and reducing activity

Govt likely to print “an awful lot of pesos” given impossibility of tapping market

Central Bank could increase rate to lure peso holders

There may be pressure on parallel dollar market, which eventually could force govt to either depreciate the currency or try to settle with bondholders