UPDATE 2-Argentine bonds take it on the chin after IMF OKs restructuring

Argentine bond prices fell 1.5% on Thursday after the International Monetary Fund essentially gave the government a green light to restructure its bonds, the latest chapter in the once-wealthy country's long history of financial crises. The Fund, wrapping up a week-long visit to Argentina, said rising public debts meant the country needs a definitive plan to restore debt sustainability, which would require a "meaningful contribution from private creditors."

The question is how much creditor blood will be left on the floor after the upcoming restructuring operation. "The IMF opened the door for Argentina to begin debt restructuring. Now the focus shifts to determining what a 'meaningful contribution from private creditors' means, and what will happen with the debt Argentina owes to the fund," local brokerage SBS Group said in a report.

Argentine bond prices are down about 5% so far this year. Country risk spreads stood 81 basis points wider at 2,116 over safe-haven U.S. Treasury paper, indicating an increase in the perceived likelihood of default.

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