sovereign debt crisis. ARGENTINA.. JR Topics

Argentina fires back at US court over ruling on debt payment 

Argentine economy minister Hernán Lorenzino said his government would appeal a US court's ruling that the country must pay US$1.33bn to holders of defaulted bonds from its 2001-02 sovereign debt crisis.

The minister attacked the ruling - issued Wednesday (Nov 21) by US district court judge Thomas Griesa - calling it "judicial colonialism," according to press reports.

"Paying the vulture funds is not a fair solution," Lorenzino said, referring to the group of hedge funds that own the defaulted debt. "It's not legal under our laws and regulations."

The decision forces Argentina's government into a corner, as it makes paying the hedge funds a mandatory condition for the country's next scheduled payment of US$3bn to holders of bonds restructured in the default's aftermath.

The payments are due December 15, and ignoring the court order could lead to another sovereign default. Argentina has said it is willing to take the case to the US supreme court if necessary.

Challenging the decision will not necessarily block the payment, as Griesa also ruled that the country must pay the US$1.33bn into an escrow account if the case is still being reviewed by the appeals court.

The judge cited recent statements by President Cristina Fernández and other officials in her administration that Argentina would not pay the hedge funds.

This provoked an angry response from planning minister Julio de Vido.

"I'm not going to question the ruling's technicalities... but it's striking that a foreign judge is taking punitive action based on a political position expressed by some officials," de Vido said, according to state news agency Telam.

After defaulting on nearly US$100bn of debt in 2001, Argentina restructured some 92% of the bonds at a more than a 70% discount.