Argentina calls on US to intervene on debt default

Monday 11 August 2014 17.20
A US judge has called on Buenos Aires to stop claiming that it had met its obligations and hadn't defaulted
A US judge has called on Buenos Aires to stop claiming that it had met its obligations and hadn't defaulted

Buenos Aires has called on Washington to intervene in a court case over Argentina's defaulted debt.

The move comes in the wake of a threat of contempt from a US district judge for making, what he called, false statements.

US Judge Thomas Griesa, overseeing Argentina's long-running battle with hedge funds over defaulted debt, said he would issue a contempt of court order unless the government stopped publicly claiming it had met its obligations and was not in default.

Cabinet chief Jorge Capitanich countered that a contempt order would violate Argentina's sovereign immunity and he called on the Obama administration to rein in Griesa.

"When it comes to a bilateral relationship with a sovereign country and the violation of its immunities, it is necessary for the executive branch to intervene," Mr Capitanich said.

"The executive has a monopoly on relations with other countries. The United States is responsible for the actions of its branches of power, in this case the judicial branch, regardless of the independence of the functioning of those branches," he said.

In 2002 Argentina defaulted on about $100 billion in sovereign bonds.

It restructured most of that debt in a deal that gave holders less than 30 cents on the dollar while a group of hedge funds went to court for full repayment.

In 2012 Griesa ruled that Argentina could not repay holders of restructured debt without also paying hedge funds their court-award of $1.33 billion plus interest at the same time.

Argentina says it met its obligation to the holders of restructured bonds when it deposited $539 million into the account of intermediary Bank of New York Mellon in June.

Griesa called the deposit illegal and ordered the money frozen.

As a result, Argentina effectively missed the coupon payment after a grace period ended on July 30, pushing it into default on its restructured debt.

Griesa reiterated on Friday that "there has been no payment."