Argentine Debt Plan 'Illegal' Says US Judge

Written By Unknown on Senin, 25 Agustus 2014 | 23.33

Argentina's plan to take control of its own debt repayments to US bond-holders after a default has been ruled illegal by a court in New York.

The federal judge in Manhattan stopped short of finding the South American nation in contempt of court, but described Argentina's actions as "lawless".

District Judge Thomas Griesa rejected requests by lawyers for US hedge funds to make a contempt finding, saying he wanted everyone to concentrate on an eventual settlement.

Griesa said: "In my judgement, it does not add anything to the scales of settlement to make a finding of contempt."

But he said that proposed legislation, announced on Tuesday by Argentine president Cristina Fernandez, would violate orders he imposed favouring creditors who refused to accept restructured bonds following the country's 2002 default on $100bn of debt.

Argentina missed a June interest payment after Griesa blocked payments owed to holders of debt issued under US law that was restructured in 2005 and 2010.

The country has argued that any deal it reaches with US bondholders, owed about $1.5bn, would obligate it to pay over $20bn to other bondholders.

Ms Fernandez, who has refused to pay the US hedge funds face value on their bonds, wants legislation passed that would allow her government to resume payment to holders of exchanged bonds, in defiance of the US court.

She has described the funds, including New York billionaire Paul Singer's NML Capital Ltd, as "vultures" because they refused to participate in swaps in 2005 and 2010 in which over 90% of Argentina's bondholders agreed to accept lesser-valued bonds.

"Far from delivering justice and bringing equal conditions among the parties, the judge only looks to favour the vulture funds", Argentina's statement said after the ruling.

It accused the judge of being contemptuous of Argentina's sovereignty.


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