Newspaper article International New York Times

Argentina Seeks Way around U.S. Court Order on Debt

Newspaper article International New York Times

Argentina Seeks Way around U.S. Court Order on Debt

Article excerpt

Axel Kicillof, the economy minister, said the government would seek to pay bondholders of restructured debt under Argentine legislation.

The Argentine government has started to take steps to circumvent a United States court order that technically places it in default.

Axel Kicillof, the economy minister, said Tuesday that the government would pay bondholders of restructured debt under Argentine legislation. "We are taking the first steps to pay the debt in Argentina," he said.

A majority of bondholders from Argentina's $95 billion default in 2001 entered into debt exchanges in 2005 and 2010, taking write- offs of about 70 percent. But a small percentage of what Mr. Kicillof refers to as "vulture funds" have held out for full payment.

On Monday, the United States Supreme Court rejected an appeal from Argentina over a ruling that obliges it to pay the holdouts and the holders of restructured debt at the same time.

Mr. Kicillof said the order, which forces Argentina to pay around $1.3 billion to the litigating holdouts, would be applied more widely. That, he said, meant the country would owe a total of $15 billion.

"It would set off a chain of payments that are unpayable," he said. "It would push us into a default."

The economy minister echoed the defiant comments of President Cristina Fernandez de Kirchner, who said on Monday that "Argentina has no reason to be submitted to this kind of extortion."

Mr. Kicillof accused the holdout creditors of wanting "to ruin our restructuring. The vultures are vultures because they do not negotiate."

"We will impede them," he said.

Despite the bold declarations, Argentina will most likely find it hard to evade the rulings of the United States courts. The large international banks that handle bond payments have already stated that they will not do anything that could put them in contempt of the American courts.

Dollar payments, even those handled by foreign banks, typically end up being routed through New York, making such flows vulnerable to the United States courts. …

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