Argentina says next bond payment “impossible”, default looms

Friday, 20 June 2014 00:00 - - {{hitsCtrl.values.hits}}

REUTERS: Argentina threatened to default on its debt on Wednesday when the Government called it “impossible” to pay bond service due on 30 June, citing a US court decision earlier in the day that increased pressure on the economically ailing country. Buenos Aires is locked in a 12-year legal fight with creditors who refused to participate in two restructurings that followed Argentina’s 2002 default on $ 100 billion in bonds.

The long impasse in the US courts has kept the country from accessing international capital markets as its economy stagnates, inflation soars and central bank reserves fall. On Monday, the US Supreme Court declined to hear an appeal by Argentina in its battle against the hedge funds which refused to take part in restructurings offered in 2005 and 2010. This left intact a ruling by US Judge Thomas Griesa in New York ordering the country to pay the hedge fund “holdouts”. The 2nd US Circuit Court of Appeals on Wednesday lifted the stay it had placed on an injunction by Griesa barring payment to holders of restructured bonds via US banks unless the “holdouts” were paid $ 1.33 billion at the same time. “The lifting of the stay by the Second Circuit makes it impossible to make the next payment on restructured debt in New York, and shows a complete lack of willingness to negotiate under conditions different from those dictated by Judge Griesa,” a statement from the Argentine Economy Ministry said late on Wednesday. Talks are nevertheless expected between the two sides in New York next week.