Argentina deposits debt payment, but U.S. court blocks payout

Thu Jun 26, 2014 6:26pm EDT
 
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By Hugh Bronstein

BUENOS AIRES (Reuters) - Argentina has deposited the next payment needed to avoid a default on its restructured bonds, but a U.S. federal court decided on Thursday not to let the payment go through.

Both actions increased the stakes in a 12-year legal chess game 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.

If it fails, Latin America's No. 3 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.

In order to pay holders of the country's restructured bonds, Argentina needed a stay to be issued by U.S. 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.   Continued...

 
Minister of Economy of Argentina, Axel Kicillof speaks to members of the media after speaking at a meeting of the G77 entitled "Sovereign Debt Restructuring: The Case of Argentina" at United Nations headquarters in New York June 25, 2014.  REUTERS/Lucas Jackson