News Column

De Kirchner lays out Argentina's debt swap plan

August 21, 2014

MICHAEL BIRD



THE ARGENTINIAN government revealed draft legislation yesterday, with measures that would allow Buenos Aires to circumvent the US legal ruling that had brought the country to a technical default.


President Cristina Fernandez de Kirchner announced the move, which would allow bondholders which could not currently access their repayments to swap the debt for securities not governed by US law.


In June, the US Supreme Court refus-ed to grant an appeal to an earlier decision, meaning that the government was obliged to make payments to holdout hedge funds. The funds did not accepted a previous restructuring deal, following the country's default in 2001-02. Although the government deposit-ed funds at Bank of New York Mellon, intended for the creditors that accepted the restructuring, the legal ruling meant that the bank could not reimburse the bondholders until the holdout funds were paid.


The new proposal would mean bondholders could swap their existing securities for bonds issued under Argentinian law, and administered by the country's state-owned Banco Nacion.


De Kirchner insisted that the legislation would be an optional move for bondholders, and that the government could not mandate that existing contracts were altered.


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Source: City A.M. (UK)


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