The appeals court ruling will allow Argentina to move forward with a planned $12.5 billion global bond issue, the country’s first since the default
NEW YORK – A federal appellate panel upheld on Wednesday a lower court ruling that authorizes Argentina to resume payments to international bondholders, blocked since 2012 amid a judicial battle between Buenos Aires and creditors who refused to accept debt restructuring in the wake of the country’s 2001 default.
The U.S. Court of Appeals in New York rejected a challenge to District Judge Thomas Griesa’s March 2 decision to lift his own 2012 injunction against payments to holders of restructured Argentine debt.
Under arrangements made by Argentina’s 1976-1983 military regime, the New York federal courts have jurisdiction over litigation involving Argentine sovereign debt and Buenos Aires uses Big Apple banks to pay bondholders.
The appeals court ruling will allow Argentina to move forward with a planned $12.5 billion global bond issue, the country’s first since the default.
Buenos Aires plans to use the proceeds of the sale to pay a $4.65 billion settlement to four U.S. hedge funds, including Elliott Management Corp. founder and CEO Paul Singer’s NML Capital Ltd., that had successfully sued Argentina in Judge Griesa’s court.
Those hedge funds snapped up Argentine bonds for pennies on the dollar following the 2001 default and boycotted a pair of restructuring accords, instead suing Argentina for full payment.
The deadline for Argentina to pay the hedge funds is Thursday.
The origins of Argentina’s 2001 default, which was then the largest in history and occurred amid a financial meltdown and economic depression, also go back to the 1976-1983 junta, which presided over a 465 percent expansion in public indebtedness.