Argentine lawmakers weigh France as debt payment alternative

GMT 23:05 2014 Wednesday ,03 September

Arab Today, arab today Argentine lawmakers weigh France as debt payment alternative

The Senate of Argentina in Buenos Aires
Buenos Aires - AFP

Lawmakers in Buenos Aires debated a measure Wednesday that would transfer Argentina's payments on its restructured debt to France, as the South American country grapples with continuing fallout from its 2001 default.
A majority of senators expressed support for the bill, which would make France, as well as Buenos Aires, locations where Argentina's future restructured debt payments could be made, legislative sources told AFP.
The measure comes amid rising uncertainty in Argentina, where the economy is on the brink of recession, inflation has topped 30 percent and the peso is weakening.
With debate extending into Wednesday evening, a vote was not expected before Thursday.
Besides the bill dealing with the debt impasse, the Senate also will be considering separate legislation to regulate production and prices over the vehement opposition of the business sector.
The measures are backed by President Cristina Kirchner, whose supporters hold majorities in both houses of the Argentine Congress.
The bill related to the debt impasse was the Kirchner administration's latest attempt to circumvent a US court order that has blocked payments to creditors holding restructured Argentine bonds.
Argentina is still dealing with the after-effects of its 2001 default on $100 billion in debt, the largest in history at the time.
Buenos Aires reached deals with most of its creditors to restructure its debt, agreeing to repay them just 70 percent of their bond values.
But two "holdout" US hedge funds have refused to accept a write-down on their Argentine bonds, and the US court ruled in their favor, forcing Argentina into its second default in 13 years.
US District Court Judge Thomas Griesa ordered the Bank of New York Mellon (BoNY), which was acting as the agent receiving Argentina's debt payments, not to transfer any payments until Buenos Aires resolves its dispute with the holdout hedge funds.
Kirchner, furious over what she sees as an affront to Argentina's sovereignty, has revoked the BoNY authorization to act as its agent while seeking to open new avenues in Buenos Aires and Paris for paying its creditors as an alternative that would sidestep the US court order.
Meanwhile, some of Argentina's creditors, including US billionaire George Soros, have sued BoNY for failing to pay them the money they are owed.
Buenos Aires, which entered into default after the grace period on a $539-million interest payment expired on July 30, is scheduled to make the next payment on its restructured debt on September 30.

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