Argentina aims at bond "holdouts" ahead of court showdown

Sat Feb 2, 2013 11:47am EST
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By Hugh Bronstein

BUENOS AIRES (Reuters) - Argentina has made its final written arguments ahead of a February 27 U.S. courtroom showdown against "holdout" bondholders demanding 100 cents on the dollar for debt that the South American country defaulted on more than a decade ago.

Oral arguments in the case, which could raise emerging market sovereign borrowing costs by complicating future restructurings, are set for the end of this month before the U.S. 2nd Circuit Court of Appeals in New York.

Argentina wants the court to overturn a finding in favor of creditors led by NML Capital Ltd and the Aurelius Capital Management funds, known as holdouts because they did not participate in restructurings under which most holders of Argentine bonds accepted reduced terms in return for payment.

The case, in which the holdouts are asking for $1.33 billion, stems from Argentina's $100 billion debt default in 2002. It has been pursued in U.S. courts because they have jurisdiction under Argentina's bond contracts.

NML and Aurelius call it unfair for Argentina to pay investors who accepted restructured terms without paying them as well. Argentina dismisses the argument.

"For all plaintiffs' talk about 'equal treatment,' what they really want is ... to enforce their contractual right to be paid a defaulted debt," Argentina said in a filing made just before midnight on Friday.

"Any actual claim to 'equal treatment' would be satisfied by treating all holdout creditors on the same terms as the participants in the republic's 2010 exchange offer," it said.

"Anything else is not equal treatment, but a preference that would violate Argentine law and public policy as well as fundamental principles of inter-creditor equity," it argued.   Continued...