Argentinean Congress Sidesteps US Court Ruling on Debt Payments

EspañolThe Argentinean Chamber of Deputies has passed legislation that enables the government to resume debt payments to bondholders, circumventing a US court ruling. The bill is designed to allow the Argentinean government to make payments either locally or elsewhere outside of US jurisdiction.

The proposal was approved early Thursday morning after 17 hours of debate, with 134 votes in its favor, 99 in opposition, and five abstentions.

The legislation proposes replacing the Bank of New York-Mellon with Nación Fideicomisos — a subsidiary of the state-owned Banco Nación — as the payment intermediary. It also encourages bondholders to move their Argentinean debt from the United States to Argentina or another foreign jurisdiction.

In August, New York Judge Thomas Griesa called Argentina’s efforts to change the jurisdiction of payments “illegal.”

Onlookers in the Argentinean Chamber of Deputies turn their backs during speeches by opposition congressman.
Onlookers in the Argentinean Chamber of Deputies turn their backs during speeches by opposition congressman. (@fedesturze)

Argentinean Congressman Enrique Vaquié opposes the legislation: “The contract [with bondholders] requires that the trustee be based in Manhattan or [the District of] Columbia, which is not the case with Nación Fideicomisos. It also does not hold the minimum required amount of capital of US$50 million. This past December, Nación only had $14 million in capital.”

Congressman Roberto Feletti, on the other hand, supports the effort: “It is a clear sign that Congress is defending the restructuring process … debt restructuring changes the course of Argentinean democracy for the future.”

“We are being extorted by a tiny group of vulture funds and the irrational decision of a municipal judge. These vulture funds have threatened us, lied to us, insulted us, and destabilized our country. If that is not a foreign attack, what is?” asked ruling party official Juliana Di Tullio, in her statements before Congress.

In an effort to gain public support, the Argentinean government has painted a stark contrast between “national interests” and the “vulture funds.”

Argentina hopes to move forward with the measure as quickly as possible, given a $200 million interest payment due on September 30.

Sources: Clarín, La Nación.

Subscribe free to our daily newsletter
Sign up here to get the latest news, updates and special reports delivered directly to your inbox.
You can unsubscribe at any time