Some Argentine bondholders are pressing a Manhattan judge to stop the clock to avoid a default of the country’s debt as early as 12:01 a.m. Thursday.
The bondholders, who own euro-denominated debt, on Tuesday asked federal court Judge Thomas Griesa to freeze for an emergency stay of at least 90 days his order requiring Argentina to pay roughly $2.2 billion to exchange and holdout bondholders.
Argentine leaders and the bondholders need more time to negotiate a clause in their bonds that the country’s officials have said could throw the country into a default — while burying it under more than $120 billion in additional debt.
Griesa has ignored similar pleas by Argentina, whose representatives — including Economy Minister Axel Kicillof — were meeting in Manhattan on Tuesday with a court-appointed mediator.
The euro-bondholders, led by hedge funds Knighthead Capital, Perry Capital and Redwood Capital, previously argued they should not be subject to Griesa’s order that Argentina pay Paul Singer and other holdout bondholders $1.65 billion while making a $539 million interest payment to the exchange bondholders — those who agreed to a debt swap following the 2001 default.
Griesa agreed with Singer — who did not consent to the swap — that he should be paid in full and has endorsed the novel way to force Argentina to pay up, which it has said it will never do.
The judge also said the euro-bondholders would be bound by the decision because the money travels through the US banking system that is subject to his orders.
Argentine leaders have sworn not to pay Singer and other holdouts a dime. It faces a possible bond default unless Griesa agrees to a last-minute stay or the country changes its mind as a 30-day grace period will end at midnight Wednesday.