Argentina to Pay Bondholders in Local Account to Skirt Ruling
Cristina Fernandez de Kirchner, president of Argentina.
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Argentina will send a bill to Congress to authorize the payment of foreign debt in local accounts in a bid to skirt a U.S. court ruling that is blocking payments and caused the nation to default on July 30.
Argentina will seek to remove trustee Bank of New York Mellon Corp. and deposit funds for foreign bondholders at an account at the central bank, President Cristina Fernandez de Kirchner said in a nationwide address. The swap will be voluntary and the government will continue to deposit funds even for those bondholders who decline to change the jurisdiction, she said.
Argentina defaulted for the second time in 13 years last month after U.S. District Court Judge Thomas Griesa blocked the nation’s $539 million debt payment because it didn’t also set aside money for creditors from the nation’s 2001 economic crisis who refused to participate in debt restructurings and successfully sued for full repayment.
“We have a lot of differences among ourselves in economic or foreign policy or in human rights but when it comes to the sovereignty of our country and the conviction that we can no longer be extorted and that we can’t become burdened with debt again, we are emerging as Argentines,” Fernandez said, holding back tears, during a speech at her office in the presidential palace in Buenos Aires.
The government will also begin depositing funds for the 7 percent of so-called holdout creditors from the 2001 default under the same terms as the previous restructurings, she said. Those investors, including Elliott Management Corp., would stand to make a return of more than 300 percent, she said.
To contact the reporters on this story: Charlie Devereux in Buenos Aires atcdevereux3@bloomberg.net; Daniel Cancel in Buenos Aires at dcancel@bloomberg.net
To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.netMichael Tsang
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