Wednesday, March 25, 2015

Griesa seeks to block Euroclear from processing payments

New York district judge Thomas Griesa.

New York district judge Thomas Griesa has issued an order to block Euroclear from processing payments on Argentine bonds, a new twist in the conflict between Argentina and the holdout investors known as “vulture funds”.

Griesa upheld the holdouts' petition filed earlier this month and ordered Euroclear, which mediates in the payment process between the South American nation and bondholders, to stop processing payments until his 2012 ruling is met.

In that sentence, the New York judge considered holdout investors should be paid full amount on their Argentine dollar denominated bonds and ordered restructured debt holders could not be paid interests until that ruling is fulfilled.

The order to block Euroclear follows Griesa’s last week decision to allow Citibank to process interest payments on US$2.3 billion of Argentina bonds due on March 31st and future payment on June 30th, while urging the bank to get out of its custody business in Argentina.

“Euroclear will not process any payments received from any source, including but not limited to Nacion Fideicomisos SA and Caja de Valores, in respect of any bonds subject to the Injunction, and will hold any such payments in suspension pending a ruling from this Court on their proper disposition,” the ruling issued today reads.

“Should Euroclear violate the terms of this Order, Plaintiffs shall be free to compel prompt compliance and to seek any other just and proper relief against Euroclear,” it warns.