A Manhattan federal judge holds the key to Argentina’s future.
The South American country will ask Judge Thomas Griesa this morning for more time to fight a ruling that it must make a $1.3 billion bond payment to hedge fund billionaire Paul Singer alongside other bondholders.
If Judge Griesa denies Argentina’s request, the country will face two equally distasteful decisions.
It could either pay Singer’s Elliott Management, a firm Argentina President Cristina Kirchner has already called a “vulture” and swore never to pay — or not make a December payment to any bondholder and thus risk a default that could bankrupt the country.
A lawyer for Argentina said not giving the country more time to argue over Singer’s bond payment would be “bizarre.”
Elliott is one of a handful of bondholders who didn’t agree to a 70 percent haircut several years ago as part of an Argentina debt restructuring.
The owners of the restructured bonds have been getting paid for years. Elliott won an appeals court decision last month that said it must get paid whenever the others did.
The hedge fund doesn’t want Argentina to get more time and wants to be paid next month.
Bank of New York Mellon, which is the trustee for the owners of the restructured bonds, is caught in the legal crossfire.
If the bank makes the payment on just the restructured bonds, it will violate a federal court order and face sanctions.
If it doesn’t make the payment, it risks angering a big client — and pushing Argentina into a second default.