BUENOS AIRES: Investors suing Argentina to recover on its defaulted debt can also try to block the South American country from making payments on $1.4 billion in Bonar 2024 bonds issued in April, a judge in Manhattan ruled.
U.S. District Judge Thomas Griesa allowed the bondholders, led by Paul Singer’s NML Capital, to update their claims to seek a ban on payments of the Bonar bonds, which Argentina says are exempt because they were issued domestically. Griesa didn’t say how he would rule on the new claims.
Griesa has blocked Argentina from paying holders of its restructured debt unless it also pays the NML group the $1.7 billion it’s owed on defaulted debt. The bondholders are seeking to increase pressure on the South American nation by extending the payment bar to the Bonar bonds.
The securities pared their gains after Griesa’s ruling, rising 0.25 cent on the dollar to 99.9. Earlier, the bonds had jumped as much as 1.1 cents.
The April debt issue is the latest flashpoint in the fight to recover on the defaulted bonds — many of which were purchased as sharply discounted debt — by blocking the nation from new borrowing.
NML is among creditors who rejected Argentina bond restructurings that imposed losses of about 70 percent and instead won the right to full repayment in courts. President Cristina Fernandez de Kirchner has refused to pay them.
Marketed Abroad
The holdouts have argued that the securities should be included in the ruling because they were marketed abroad by Deutsche Bank.
Argentine Economy Minister Axel Kicillof has said the April 21 sale of the so-called Bonar 24s proved Argentina has access to international financing even after its July 2014 default. In court, the nation’s lawyers claim the bonds were issued locally under Argentine law and don’t constitute external debt subject to Griesa’s payment ban.
Deutsche Bank AG last week complained to Griesa that the hedge funds are harassing it with abusive demands for evidence, press leaks of confidential information and misstatements in court to discourage firms from participating in legal debt offerings by Argentina.
The case is NML Capital Ltd. v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan).
