World Economy

US Ruling Detrimental to Next Argentina Gov’t

US Ruling Detrimental to Next Argentina Gov’t
US Ruling Detrimental to Next Argentina Gov’t

A new ruling by a US judge has increased the total Argentina owes holdout bondholders to $5.2 billion — a massive responsibility that if upheld likely will fall to the next government, experts said.

In a 26-page ruling, US District Court Judge Thomas Griesa concluded on Friday that by refusing to make payment to some hedge fund and individual bondholders of its defaulted debt, while making payment to other creditors, Buenos Aires was in violation of an equal treatment provision in its contracts, AFP reported Sunday.

Griesa in a 2012 ruling sided with a group of hedge funds, led by NML and Aurelius Capital Management, who for years have been trying to force Argentina to pay off $1.3b in defaulted bonds they hold.

The judge said that his 2012 ruling should also apply to more than 500 “me-too” bondholders who were not covered under the original decision.

Argentina has been refusing to pay the two hedge funds, arguing that they relinquished their claim when they refused to join a restructuring of nearly $100b in debt the country defaulted on in 2001.

“It really was just a matter of time for this to happen,” said Argentine economist Nicolas Dujovne. “It makes sense for the ruling to be the same, since what was being sought was the same.”

Under mounting pressure, the Argentine government was quick to slam the latest ruling and said it would appeal, branding Griesa’s ruling “illegal” and “unfortunate.” Buenos Aires has consistently accused the judge of bias.