The 2nd US Circuit Court of Appeals has ruled in favour of allowing Argentina to issue debt and pay its holdout creditors as agreed in February.
The Appeals Court confirmed Judge Thomas Griesa’s decision to lift the injunction – or ‘stay’ – that he himself had imposed in 2012 to block Argentina from issuing new bonds or servicing its restructured debt.
New York Judge Thomas Griesa has been at the centre of the battle with the holdouts
The move will allow the government to return to capital markets, with bond issues of up to US$15bn expected in the coming days. Economy Minister Alfonso Prat-Gay, who is leading a roadshow in the US to attract investors, said the ruling represented “one more step towards normality and development”.
According to the February agreement with the litigating holdouts, commonly known as ‘vulture funds‘, Argentina has until 14th April to pay US$4.65bn. The government has confirmed that it will not be able to meet the deadline, but hopes that lawyers for the holdouts will not terminate the deal.
In total, the government may pay up to US$12.5bn to settle with holders of defaulted debt according to the law recently approved in Congress.
Once the holdouts have been paid, any remaining funds will likely be used to finance the budget deficit, Finance Secretary Luis Caputo told Bloomberg.
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