New York, NY, United States (4E) – Argentina is facing the prospect of paying in full a group of bondholders in its defaulted bonds debt after it lost its appeal in a U.S. court.
If Argentina keeps up its payments to holders who took discounted restructured debt, then it should also pay a group of investors 100 percent of the approximately $1.33bn that the government owes them in principal and accrued interest, according to the ruling by the U.S. Second Circuit Court of Appeals in New York.
Argentina has said that it will never pay bondholders for its defaulted bonds, and its legislature created a law in 2005 disallowing such payments. Friday’s ruling leaves the country with the very slim chance of persuading the appeals court to overrule its decision or the U.S. Supreme Court to hear the appeal.
The Supreme Court, which will come back from its break on Oct. 7, will decide whether or not to consider taking up the case.
Argentina has been in a years-long legal battle with a group of holdover investors led by Elliott Management Corp. unit NML and Aurelius Capital Management, which have sued Argentina into paying the full amount of their defaulted bonds.
In 2001, Argentina defaulted on a record $95bn of foreign debt. Investors of about 91 percent of the bonds decided to take new exchange bonds in 2005 and 2010, but with a significant discount.