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NEW YORK (AP) — A federal judge in New York says Argentina can avoid defaulting on debt payments that are due Monday, by negotiating with U.S. hedge funds that are owed more than $1.6 billion.
The judge spoke at the end of a hearing that had been called to address Argentina's attempt to pay $832 million to bondholders who had swapped their bonds for others with reduced value after Argentina's economy collapsed in 2001.
The judge said it would be illegal for Argentina to make that payment to the majority of its bondholders, without also paying the U.S. hedge funds that refused to take part in a pair of bond swaps.
Argentina's next installment to the majority of its creditors is due Monday. But the government has a 30-day grace period beyond that to avoid going into catastrophic default.
A lawyer for the Bank of New York Mellon said it had received $539 million from Argentina, for distribution to the bondholders who had exchanged their bonds for lesser value ones. The judge told the bank to return the money to Argentina, saying that the payment is "illegal."
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APPHOTO NYJD106: Jonathan Blackman, a lawyer representing Argentina, leaves federal court after a hearing regarding the country's request to extend deadlines to repay a $1.65 billion debt to U.S. hedge funds, Friday, June 27, 2014, in New York. Judge Thomas P. Griesa has ordered a U.S. bank to return a $539 million payment from Argentina, saying it was illegal to make. The order by the judge came Friday, three days before Argentina faces default if it fails to pay $832 million to the majority of its debt holders. (AP Photo/Jason DeCrow) (27 Jun 2014)
<<APPHOTO NYJD106 (06/27/14)££
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