It’s really starting to feel like Groundhog Day waiting for the Second Circuit to make that final decision in the Argentina case. It’ll provide answers on the form of ratable payment to holdouts, the risk to those all-important third parties, and the question of enforcing the payment injunction outside the US.
There have been some distracting moves in the Belgian wing of this saga in the meantime, however…
They might tell us a bit more about what the Argentine bond world will look like following the court’s ruling, and/or a continued stay on the injunction, and/or Supreme Court interest. It includes the game of triage that Argentina could end up playing over paying (swapping? exchanging?) restructured bonds without attaching payments to holdouts.
Click to enlarge:
That’s a letter sent to the Second Circuit on Monday from the Euro Bondholders, owners of a euro-denominated, English law-governed section of that restructured debt.
They’ve broken the news to the judges that the Brussels Commercial Court has kicked out their bid for emergency relief as “premature”.
The Euro Bondholders have been a bit peeved lately that the injunction may restrain “foreign entities” (particularly, Euroclear) from helping the Argentine government pay on their bonds, so they’ve been going round Belgian courts to seek assurance that these entities must pay them. It’s a transatlantic standoff in the making over sovereign debt-law.
This particular rejection is a little bit academic. The relief was designed to make sure that the Euro Bondholders got through a specific payment of a few hundred million dollars on June 30. This got paid anyway (the Second Circuit headache is still in the future!) but in any case Argentina’s intentions whether or not to pay wouldn’t have been clear beforehand. Hence “premature”.
The real point of the letter, though, might be this — the other Belgian lawsuit in play here:
The Belgian Plaintiffs’ merits action remains pending. The action seeks a permanent order requiring Euroclear and Bank of New York Mellon Brussels to honor their obligations to pass through funds received for the benefit of the Belgian Plaintiffs under their euro-denominated exchange bonds. It also seeks a declaration that Belgian law renders the injunction in this case unenforceable against the Belgian Defendants. None of these issues were considered in the Belgian Court’s order. Those issues by necessity will be determined in connection with the merits action, for which the next hearing is scheduled for September 5, 2013.
September brings Argentina’s next big round of payments on the restructured debt…
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