MercoPress. South Atlantic News Agency

US judge freezes 16 billion in Argentine sovereign bonds

A United States judge granted on Wednesday a request by bondholders suing Argentina to extend a freeze on as much as 16 billion US dollars in sovereign bonds issued by the country and which now held by the Depository Trust Co. in New York.

Argentina claims it no longer has any interest in the bonds and that they are worth only 2 billion US dollars. The order stems from a class-action, or group lawsuit brought by bond holders who claim Argentina wrongly failed to pay interest or principal on its 11 percent global notes due in October 2006. The plaintiffs, who claim the bonds are worth as much 16 billion, are seeking more than a billion US dollars in damages. US District Judge Thomas Griesa in New York first issued the freeze April 18. Today he extended it after hearing arguments from lawyers for Argentina who urged him to lift it. Griesa also said lawyers for the bondholders may seek documents relating to the bonds that may show if Argentina has an interest in them. "I couldn't rule today that the Republic of Argentina has no interest on what's on the books at" Depository Trust, the judge said today in Manhattan federal court. "There are questions". Argentina defaulted on 95 billion in debt in late 2001. In 2005, then-President Nestor Kirchner offered holders of defaulted debt 30 cents on the dollar. Holders of about 20 billion in bonds rejected that deal. Argentina has since refused to re-open negotiations, preventing the country from being able to directly tap international credit markets. The country has also been the subject of lawsuits by individual bondholders. Lawyers for the bondholders said they've traced the Argentine bonds to DTC, the world's largest depository. Argentina said it doesn't own the bonds which are being held by DTC in the name of a bank, Caja de Valores SA. In the preliminary ruling April 18, Griesa temporarily blocked Argentina from transferring, selling, pledging, loaning or otherwise encumbering any bonds held by Caja de Valores in DTC. Griesa said he'd give the plaintiffs wide latitude to determine whether Argentina has an interest in the bonds. "Your client is now refusing to pay lawful judgments and debts. That is wrong" Griesa told a lawyer for Argentina, Jonathan Blackman. "If there is something reachable, I will allow it to be explored".