BUENOS AIRES (AFP) ― Argentina passed a measure Thursday aimed at sidestepping a U.S. court order that has blocked the country from paying back debt tied up in a feud with hedge funds.
The law, approved by the senate last week, got the green light in the legislature’s lower house by a vote of 134 in favor to 99 against, with five abstentions.
The immediate goal is to allow Argentina to make good on a debt payment of $200 million due on Sept. 30.
It is the latest move by President Cristina Kirchner’s administration in a legal tussle with creditors who have refused to join a restructuring deal following Argentina’s 2001 default on $100 billion of debt.
Under that deal, 93 percent of the country’s creditors accepted a cut of 70 percent of the face value of their Argentine bonds.
But two foreign hedge funds, U.S. billionaire Paul Singer’s NML Capital and U.S.-based Aurelius Capital Management, refused to accept the write-down.
They took Argentina to court and won a ruling from U.S. federal Judge Thomas Griesa ordering the South American country to pay them the full $1.3 billion due.
Griesa also blocked Argentina from repaying its other creditors until it fulfills the requirement, causing the country to default again in July.
Under the new law, passed early in the morning after a marathon 17-hour session, the repayment location is moved from New York to either Buenos Aires or Paris.
A third option opens the possibility for a bondholder to propose an alternative mechanism to collect the debt. The legislation defies Griesa’s ruling that moving the repayment site outside the United States would be illegal.
To pressure the government, the district court judge froze $539 million that Buenos Aires deposited at the Bank of New York Mellon to pay the bondholders that accepted debt restructuring deals in 2005 and 2010.
koreaherald@heraldcorp.com
