Argentina suffered a stinging blow late on Wednesday, when a New York federal judge, citing threats by the country’s leaders to defy his rulings in a decade-old dispute over defaulted sovereign bonds, ordered immediate payment.
In an ruling delivered just as the United States headed off for its Thursday Thanksgiving holiday, U.S. District Judge Thomas Griesa rejected Argentina’s request to maintain his previous order halting payments to holdout investors who did not participate in two bond exchanges of defaulted sovereign debt.
The ruling is the latest development in a litigation saga that has lasted more than ten years and now appears to be favoring holdout bond investors such as Elliot Management Corp’s NML Capital and Aurelius Capital Management.
If Griesa’s ruling is upheld and Argentina chooses to defy him, U.S. courts could ultimately inhibit debt payments to creditors who accepted the terms of the restructuring, out of consideration for investors who rejected Argentina’s terms at the time.
This would trigger a technical default on approximately $24 billion worth of debt issued in the 2005 and 2010 exchanges.
Last week, Argentina, which defaulted on its bonds in 2002, asked Griesa to keep his stay order in place while the U.S. 2nd Circuit Court of Appeals for New York considered the country’s request for a revisitation of an unfavorable ruling in October.
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