Argentina, bruised and battered after a 10-year battle to sidestep billions of dollars in bond payments, is lashing out at US courts and a Manhattan federal court judge.
A high-ranking member of Argentina President Cristina Kirchner’s administration terms “judicial imperialism” the Thanksgiving eve ruling by Judge Thomas Griesa that ordered the South American country to place a $1.3 billion bond payment in escrow pending the end of the legal tussle.
Kirchner has repeatedly said she would not pay up.
Griesa, frustrated with Argentina’s repeated attempts to stall the legal proceedings, sided with New York hedge fund billionaire Paul Singer, whose Elliott Management owns Argentine bonds that were defaulted on back in 2002.
Roughly 93 percent of the bondholders agreed in 2005 and 2010 to a restructuring that paid out 34 cents on the dollar. Singer was among the holdouts. He has been fighting since then to get paid.
A payment on warrants of the restructured bonds is due Dec. 15 — and Griesa said Argentina must put the $1.3 billion due Singer and his fellow holdouts into escrow at that time while it takes its fight to federal appeals courts.
Kirchner has called the holdouts “vultures” and repeatedly insisted the country will never pay them. Singer and the others are demanding a payout of 100 percent plus interest.
It doesn’t look like Kirchner will agree to put money in escrow, either.
“Paying escrow is a non-starter” as far as Argentina is concerned, said Vladimir Werning, an analyst at JPMorgan Chase. Argentina and the restructured bondholders are expected to ask an appeals court today for an emergency hearing to avoid any payment to Elliott while appeals are ongoing.
Werning didn’t rule out an end run by Argentina around Griesa’s ruling. “We think the end-game is a re-routing of payments [outside the US],” he said.
Following last week’s ruling, Argentina’s minister of economy, Herman Lorenzino, said Argentina will continue to appeal, taking the case to the US Supreme Court if necessary. He referred to Griesa’s ruling as “judicial imperialism.”
Restructed bondholders have feared that Bank of New York Mellon, the trustee for the bondholders, won’t make their payments if Argentina disobeys Griesa’s ruling, triggering a technical default.
Some $3 billion in Argentine warrant payments are due Dec. 15. The price on those bonds fell 9 percent last week as investors feared the worst.