Argentina will continue repaying its debt on the same terms, the country’s economy minister said on Sunday after Buenos Aires lost an appeal in a US court in its case against unhappy creditors.
On Friday, a US appeals court in New York ordered Buenos Aires to pay US$1.47 billion to hedge funds holding its defaulted bonds, quashing an appeal by Buenos Aires against an initial judgment last year.
“We will continue to pay [the debt] as we have been until now, under the same terms,” Argentine Economy Minister Hernan Lorenzino told state news agency Telam.
The ruling was “an attempt to bring the country back to the situation it was in in 2001,” Lorenzino said.
Faced with bankruptcy in 2001, Argentina reached a deal with almost all of its private creditors to restructure its debt at a discount of nearly 70 percent in two phases, in 2005 and 2010, for a total of US$90 billion.
The US court endorsed the original decision that Argentina must compensate two hedge funds 100 percent of the value of defaulted Argentine government bonds they hold, even though the two declined to take part in a restructuring of the debt.
The funds in question are NML Capital and Aurelius.
Given that Buenos Aires had requested the US Supreme Court to weigh in on the case, the court said it would hold off on enforcing the decision to force Buenos Aires to repay the debts.
Buenos Aires has argued that bondholders who took part in the 2005 and 2010 restructuring of nearly US$100 billion of defaulted debt, which forced on them huge writedowns of the face value of the bonds, would now be able to lay claim as well for 100 percent compensation.
That could overwhelm the country’s finances and lead to a fresh default, Argentina has claimed.