U.S. judge orders Argentina to pay additional $5.4 bn to bondholders

U.S. District Judge Thomas Griesa has handed down a new decision against Argentina in a longrunning debt case, ruling that the country must pay $5.4 billion to a group of “metoo” creditors based on an equaltreatment provision in their bond contracts.

The more than 500 plaintiffs hold debt that Argentina defaulted on in 2001 and refused to join the vast majority of creditors in accepting steep haircuts in 2005 and 2010 restructurings.

Griesa, a federal judge in Manhattan, ruled in 2012 in favor of another group of holdout bondholders led by two hedge funds NML Capital Ltd., a unit of Paul Singer’s Elliott Management Corp., and Aurelius Capital Management , ordering Argentina to pay them $1.3 billion plus interest.

The “metoo” creditors were not initially a part of that earlier suit but later argued that they should also benefit from Griesa’s ruling.

Argentina has refused to pay the holdout creditors, calling hedge funds such as NML Capital “vulture funds,” while also attempting to pay the exchange bondholders.

Griesa wrote in his latest ruling Friday that by trying to pay the holders of restructured debt Buenos Aires is violating a “promise to rank plaintiffs’ bonds equally with its laterissued external indebtedness.”

Buenos Aires slammed the latest ruling, saying it will file an appeal.

“These plaintiffs are the same vulture funds that already obtained a similar order in the past, but now they disguise themselves in new cases like ‘metoo’ to exert more pressure” on Argentina to reach a settlement, Argentine Economy Minister Axel Kicillof said.

Buenos Aires and holdout creditors have been locked in a longstanding legal battle that stems from a massive Argentine debt default in 2001 amid a financial meltdown and economic depression.

The origins of the debt problem go back to Argentina’s 19761983 military regime, which presided over a 465percent expansion in public indebtedness.