US court blocks Argentina debt payout

US federal court decides not to let most recent installment of Argentina's debt payment through.

    US court blocks Argentina debt payout
    Argentina will have the month of July to negotiate with its holdout creditors before falling into technical default [AP]

    Argentina has deposited the next payment needed to avoid a default on its restructured bonds, but a US federal court has decided not to let the payment go through.

    Both actions increased the stakes in a 12-year legal dispute between Argentina and creditors who refused to accept the downgraded terms offered by the country's 2005 and 2010 debt restructurings and are suing for full repayment.

    Argentina will have the month of July to negotiate with its holdout creditors before falling into technical default. The
    next payment is due on Monday, but with that payment blocked by the courts, Buenos Aires will have a 30-day grace period to strike a deal with the holdouts.

    We affirm our commitment to honor our debt to all creditors

    Axel Kicillof, Argentina Economy Minister 

    If it fails, Latin America's third largest economy would be pushed into another painful default at the end of next month. Economy Minister Axel Kicillof said Argentina owes an $832 million coupon payment on restructured bonds on Monday.

    "Of that total, $539 million was deposited in the accounts... of the Bank of New York Mellon at the Central Bank of Argentina," Kicillof said, adding that the rest of the $832 million had been deposited by way of other financial institutions.

    "We affirm our commitment to honor our debt to all creditors," he said.

    Stay request denied

    In order to pay holders of the country's restructured bonds,Argentina needed a stay to be issued by US District Judge Thomas Griesa in New York because he had ordered earlier that Argentina was not to make payments without paying the holdouts at the same time.

    Griesa denied Argentina's stay request about an hour after Kicillof said the deposit had been made.

    Griesa scheduled a hearing for 14:30 GMT on Friday after getting a letter from the holdouts referencing the deposit and asking him to "address this violation of thiscourt's order."

    Griesa has ordered Argentina to pay the holdouts $1.33 bn plus accrued interest, at the same time it pays the 93 percent of bondholders who accepted the 2005 and 2010 restructurings.

    Argentina has said it cannot afford to pay so much to the holdouts and asked Griesa for a stay on that order, which would have allowed Monday's payment to go through.

    SOURCE: Reuters


    YOU MIGHT ALSO LIKE

    Interactive: How does your country vote at the UN?

    Interactive: How does your country vote at the UN?

    We visualised 1.2 million votes at the UN since 1946. What do you think are the biggest issues facing the world today?

    'We were forced out by the government soldiers'

    'We were forced out by the government soldiers'

    We dialled more than 35,000 random phone numbers to paint an accurate picture of displacement across South Sudan.

    Interactive: Plundering Cambodia's forests

    Interactive: Plundering Cambodia's forests

    Meet the man on a mission to take down Cambodia's timber tycoons and expose a rampant illegal cross-border trade.