Weekend News / World

US court finds Argentina’s plan to exit debt default illegal

By Marion Ali, Staff Reporter

A US court has ruled that Argentina’s plan to exit its debt default as illegal. Argentina had planned ask investors holding defaulted bonds to swap them for a new locally issued debt.

New York Judge, Thomas Griesa said the plan was “lawless” but he stopped short of finding the country in contempt of court.

Argentina was trying to get around an earlier court ruling banning it from paying interest to investors who had accepted restructured bonds.

Mr Griesa ruled that the country must first pay the hedge funds holding out for full payment on the bonds on which it defaulted in 2001.

The hedge funds, which bought Argentina’s bonds at a big discount after its economic meltdown and previous default in 2001-02, are owed an estimated US $1.3bn.

Argentinian President, Cristina Fernandez de Kirchner says the country cannot afford to pay the hedge funds that
Argentina has consistently refused to pay, saying it cannot afford to do so, and called them “vultures” for refusing to swap their bonds for lesser valued ones.

In July, Argentina’s Economy Minister Axel Kicillof flew to New York to try to make a deal with the hedge funds.

However, the talks broke down, forcing Argentina to default on its debt – its second default in 13 years – thus exacerbating problems in its recession-hit economy.

On Thursday, Mr Griesa urged the two sides to try and find a compromise.

(Source: BBC World)

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