Investors holding US$1 billion worth of restructured Argentine debt say they are preparing to appeal a US court ruling that they fear would trigger another default and prevent them from being paid principal and interest due on their bonds next month.
US District Judge Thomas Griesa ordered late on Wednesday that Argentina immediately pay a separate group of holdout investors, who rejected two debt restructuring offers, the US$1.33 billion in judgments they have won in court, a stinging blow to the country’s efforts to overcome a 2002 debt crisis.
The holdout investors in the case are led by NML Capital, an affiliate of Elliott Management, and Aurelius Capital Management, both based in New York.
Griesa’s order means Argentina must deposit the money into an escrow account by Dec. 15, which protects both sides of the case pending a final decision by the US Second Circuit Court of Appeals.
“Given Judge Griesa’s obvious frustration with the Republic of Argentina, we expected this ruling. What we did not expect was the disregard of innocent Exchange Bond Holders’ due process rights,” said Sean O’Shea, a lawyer representing a group of hedge fund investors.
At stake for all exchange bondholders is a potential technical default on approximately US$24 billion worth of debt issued in the 2005 and 2010 exchanges. Principal and interest payments due those bondholders next month total over US$3 billion.
“We are preparing an immediate appeal and motion to stay this ruling so that we may be heard in the 2nd Circuit Court of Appeals,” O’Shea said in a statement released late on Thursday through a spokesman.