Argentina Bonds Judge Says He Will Lift Injunctions on Debt
Argentina persuaded a U.S. judge to drop court orders barring the country from issuing new bonds or servicing its restructured debt, a dramatic shift in the 15-year standoff between the South American nation and its international creditors.
U.S. District Judge Thomas Griesa Friday agreed to drop the injunctions once Argentina repeals laws barring payment of its defaulted debt and makes full payment to bondholders who settle by Feb. 29. The decision is conditioned on a federal appeals court’s allowing Griesa’s ruling to go forward.
With the ruling, hedge funds including Paul Singer’s Elliott Management Corp. lose a powerful tool to force payment from Argentina, while the country gains greater leverage in settlement negotiations. The decision represents a vote of confidence in the administration of Argentina’s new president, Mauricio Macri, which has negotiated with holders of defaulted debt and settled more than $1 billion in claims.
“Put simply, President Macri’s election changed everything,” Griesa said. “The Republic has shown a good-faith willingness to negotiate with the holdouts.”
Griesa’s decision follows a reversal in approach from Cristina Fernandez de Kirchner, Argentina’s former president, who left office in December. Kirchner referred to holders of the defaulted debt as "vultures" and called Griesa, the 85-year-old jurist overseeing lawsuits tied to Argentina’s 2001 default, a "senile judge." Kirchner triggered a new default in 2014 when Argentina was blocked from making payments on its restructured debt after refusing to pay holders of the defaulted debt.
Spokesmen for Elliott Management and Aurelius Capital Management, the hedge funds leading the litigation, didn’t immediately return phone calls seeking comment. Yael Bialostozky, a spokeswoman for the Argentine finance ministry, didn’t immediately respond to an e-mail seeking comment.
The case is NML Capital v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan).
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