An Appeals Court Just Granted Argentina The Right To Fight Hedge Fund Managers Another Day

argentina Kirchner

They said it couldn’t be done (or that it was highly unlikely).

But an Appeals Court has granted the group of bond holders that restructured Argentine debt (exchange bond holders) the right to challenge Judge Thomas Griesa’s ruling that Argentina must pay bond holders that didn’t restructure, Bloomberg reports.

Get all that?

This is a huge victory Argentina, and it’s a loss for billionaire hedge fund manager Paul Singer and other bond holders of the country’s 2001 sovereign debt working with him.

Last week, Judge Thomas Griesa ruled that Singer and other bond holders who did not restructure the Argentine debt they bought in 2001 must be paid in full (that’s $1.3 billion).

To Griesa’s mind, if you’re paying some bond holders, you have to pay them all, restructure or no.
In the stipulations of his payment structure, he made it pretty hard for Argentina to get out of doing that too.

Argentina has said that they would appeal, and so did the exchange bond holders. Observers said, however, that the likelihood that they would win was super low.

But they did. Judge Griesa’s  ruling would have forced Argentina to make a $3 billion payment on December 15th. The Appeals Court put a stay on that until the exchange bond holders can make their case as interested non-parties.

What the exchange bond holders have argued is that they shouldn’t be punished if Argentina does not want to pay Singer and co., as the country has said it won’t time and time again.

This has been a big argument in the world of sovereign debt. After all, why should any creditor restructure and take a haircut ( in this case, one of 70 cents on the dollar) if another creditor can just sue for full payment.

So get ready for round 2,473.

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