December 20, 2014
CFK announces plan to remove BONY as agent, pay bondholders in Buenos Aires
President Cristina Fernández de Kirchner has announced that a new law to be debated in Congress will seek to remove the Bank of New York as the agent through which restructured bondholders receive payments, clearing the way for those creditors as well as holdouts to be paid in Buenos Aires.
Speaking via national broadcast today, the head of state unveiled the Sovereign Payment Law, which if passed will declare the 2005 and 2010 debt swaps as of public interest, thus allowing 100 percent of bondholders to receive payment.
The move follows the ruling of New York judge Thomas Griesa to prohibit the BONY from passing on to creditors interest services deposited by Argentina. Holdout investors led by NML Capital and Aurelius won a judgement that states that holders of restructured debt cannot receive payments until a settlement is reached with the so-called 'Vulture funds'.
During her address, CFK affirmed that "The Convertibility Law put the country fiercely in debt," suggesting that the policy of pegging the peso to the dollar led to what she termed "the default and institutional breakdown of 2001."
"Every Argentine knows that this government did not take out this debt," the president fired.
Cristina also emphasised that this move was provoked by the refusal of the vultures to reach a compromise with Argentina over the bonds purchased following the default of 2001.
"We tried to negotiate with the vulture funds, but they do not negotiate," she explained, before slamming the conduct of Griesa in blocking payment to creditors.
"Griesa seized money that was no longer Argentina's".
Under the proposed law, bonds currently held under New York jurisdiction would be moved to Argentina. A trust fund under the guardianship of the Banco Nación would take responsibility for paying creditors, and not the BONY.
Cristina added that an account would be opened in the Central Bank, reopening the 2010 restructuring for the 7 percent of creditors who did not participate in debt swaps.
"We're going to open a Central Bank account to deposit the 7.6% (holdouts) what they're owed as if they had accepted the swap," she underlined.