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December 22, 2014
Wednesday, November 14, 2012

Argentina seeks US appeals court retrial on debt ruling

Argentina yesterday filed a petition for a retrial at the US Second Circuit Court of Appeals over a debt ruling that would force the country to pay holdout creditors owning bonds in default since 2002.

The court filing said Argentina is seeking a retrail with the three-judge panel that ruled in favour of the holdouts last month as well as with the entire Second Circuit Court of Appeals.

Argentina in its brief said the earlier appellate ruling last month interpreted a “boilerplate” provision underlying trillions of dollars in debt in a way that was “inconsistent with market understanding.”

If left in place, the Second Circuit’s initial ruling “will exacerbate future sovereign debt crises by making voluntary debt restructuring essentially impossible,” Argentina argued in the brief.

Bonds fall on ‘griesa effect’

The bonds tied to GDP growth fell by 4.1 percent yesterday, while bonds such as the Boden 2015 lost 0.8 percent, the Par (which is in pesos) fell 2 percent and the Pro 13, 0.8 percent.

An analyst explained that the reason for the fall “is that Argentina is firmly opposed to conceding any payment to the vulture funds.” Therefore investors fear that if the holdouts aren’t paid, this will cause an embargo leading to a technical default.

On Monday, President Cristina Fernández de Kirchner, repeated that she will continue to refuse to pay those who did not enter the debt restructuring process, which was accepted by 93 percent of the bondholders.

Investment fund NML Capital yesterday presented US judge Thomas Griesa with a note that indicated how much they demand to be paid for the bonds that did not enter the governments bond-swap deal.

The investment group is responsible for the seizure of the Libertad frigate, after presenting a lawsuit through the Ghanaian judicial system.

Last month, the US appeals court ratified the New York judge‘s verdict, which ruled that Argentina should pay all the bondholders, whether they had entered the bond-swap deal or not.

According to sources, after the ‘vulture funds‘ present their proposal, lawyers representing Argentina have 72 hours to formally respond to the proposal.

At a hearing Friday, Griesa said he intended to rule before December 2, when Argentina is scheduled to make the first of three interest payments on the exchange bonds, which will total more than $3 billion over the course of the month.

Peter Truell, a spokesman for Elliott, the owners of NML, declined to comment on Argentina’s retrial petition.

— Herald with Reuters, Ambito.com

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