BUENOS AIRES (dpa) – Argentina’s National Congress passed a measure Thursday to allow the government to repay defaulted bonds through its own bank instead of a New York account, in an attempt to circumvent a US court that blocked renegotiated payments to some investors.
After a 15-hour debate on legislation passed last week in the Senate, the lower Chamber of Deputies approved the measure 134-99 on Thursday to deposit payments to bondholders in state-controlled Banco de la Nacion Argentina, instead of Bank of New York Mellon Corp.
The measure awaits President Cristina Fernandez de Kirchner’s signature into law.
Argentina defaulted on sovereign bonds in 2001. More than 92 per cent of Argentina’s creditors have accepted partial settlements, while others have rejected restructuring deals offered by Buenos Aires in 2005 and 2010.
A US federal court ruled in favour of one group of holdouts, led by the New York hedge fund NML Capital, who seek to be paid in full on 1.5 billion dollars in debt before the settlements are paid to investors who agreed to discounts. The court froze 539 million dollars earmarked by Argentina for a June 30 payment due to investors who settled.
Due to the court action, Argentina missed payment on the restructured loans. Fernandez de Kirchner’s government insists Argentina is not in default because the money is available to be paid.
The Argentinian government says the legislation to allow local payments is an attempt to make the next scheduled settlement payment of 200 million dollars on September 30.
It was unclear if bondholders who settled with Argentina would accept payment through the Argentinian bank, Bloomberg financial news reported.
Argentina argues that paying holdouts in full would lead those who accepted restructuring to likewise demand full value – a sum that could exceed 120 billion dollars, or more than 15 per cent of the country’s annual gross domestic product.