Fractious negotiations began in Dubai yesterday between Argentina and investors holding its defaulted sovereign bonds, marred by confusion over exactly what the Argentines had proposed in the initial plan.

Bondholders claimed an early breakthrough in restructuring talks with the Argentines in Dubai yesterday, saying that the economy ministry had agreed to reconsider its proposal of a 75 per cent reduction in the face value of the debt.

But there was confusion about whether the Argentines' initial 75 per cent proposal included deferred interest from the date that the bonds defaulted in December 2001, which would increase the reduction in value the government is seeking.

Announcing its initial bargaining position on Monday, Mr Roberto Lavagna, Argentine economy minister, said a 75 per cent reduction in the face value of the debt was non-negotiable.  - (Financial Times Service)