Hedge funds trade on ahead of Argentine debt showdown

(Reuters) – Hedge funds are actively trading in Argentina’s choppy markets ahead of its legal showdown with rebel sovereign bondholders later this month.

Investors and creditors are waiting to see if a U.S. court upholds a ruling made on February 27 that prevents Argentina from paying holders of bonds issued in debt swaps in 2005 and 2010 until it pays interest and principal due to so-called “holdout” creditors who had refused to swap.

Argentina has persistently refused to pay these holdouts who range from Argentine pensioners to NML Capital, an affiliate of activist fund Elliott, which last year detained an Argentine ship in Ghana, demanding it be paid some of what it is owed.

As the two camps square up again hedge funds are taking advantage of the exit of other investors scared of a technical default by Argentina if the country is prevented from making further bond payments.

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