Argentine debt climbed 5.4bn of Friday following Griesa's ruling favoring 'me too' bond holders
Argentina must pay US$5.4 billion to more than 500 “me-too” holders of defaulted debt before it can pay the majority of its creditors, a US judge ruled on Friday. Argentina anticipated it would appeal the ruling.
The decision from US District Judge Thomas Griesa in New York is the latest development in long-running litigation by creditors seeking full repayment on Argentina's bonds following its 100 billion default in 2002.
Griesa has previously ordered the country to pay $1.33 billion plus interest to a group of holdout hedge funds who refused to exchange their debt before it can pay other creditors.
In Friday's ruling, Griesa said the “me-too” creditors held bonds that were substantially similar to those held by the hedge funds and thus should be treated the same way. The bonds, he said, contain a clause that requires payment at the same time as creditors who agreed to exchange their debt in 2005 and 2010 restructurings.
Argentina, he said, has violated that clause by refusing to pay the holdouts while attempting to pay the exchange bondholders, who hold about 92% of the defaulted debt worth around $28bn in outstanding principal.
“By making payments on this superior class of debt, the Republic has violated its promise to rank plaintiffs' bonds equally with its later-issued external indebtedness,” Griesa wrote.
Meanwhile Lee Buchheit, one of the lawyers from the firm Cleary, Gottlieb, Steen and Hamilton that represent Argentina in the ongoing conflict with holdout investors, has said the dispute with the so called “vulture funds” is bound to continue for years.
“There will be future problems with the restructuring of Argentine debt. The conflict with vultures will continue for at least a decade,” Buchheit said during a conference held in Buenos Aires city, according to ambito.com.
Speaking from the Banking and Financial Summit 2015, Buchheit also questioned New York judge Thomas Griesa’s decision to rule in favor of “vulture funds”.
“In 2012, holdouts were able to convince US Justice that the 'pari passu' clause meant Argentina was obliged to pay. That decision, from my point of view, was a mistake,” he said.
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