MercoPress. South Atlantic News Agency

US federal judge limits claims of Argentine defaulted bonds

Judge Thomas Griesa

A US federal judge has rejected an effort to attach some assets of Argentina's state-owned Banco de La Nacion to satisfy claims of investors holding defaulted Argentine bonds.

According to an opinion filed on Wednesday, Judge Thomas Griesa, of US District Court for the Southern District of New York, vacated previous orders that would have allowed NML Capital Ltd, a New York-based affiliate of Elliott Management investment partnership, to attach some assets of Banco de La Nacion's New York branches.

Griesa upheld the Argentine government's argument that Banco de la Nacion is not a proxy for the Argentine government. He had previously rejected efforts to attach assets of Argentina's state-owned energy company and airline, YPF and Aerolíneas Argentinas.

An attachment is a process to gain control of property in order to satisfy a claim or judgment.

However, in the same opinion filed on Wednesday, Griesa did upheld attachments against 3.2 million US dollars in an account belonging to a division of Argentina's Ministry of Science. This would allow NML to partially satisfy judgments that Griesa previously granted it in its case against Argentina.

Argentina defaulted on roughly 100 billion USD of sovereign debt eight years ago and later restructured the debt with a steep discount. Holders of some 20 billion in defaulted Argentine bonds did not enter the restructuring and some of them have sued, trying to recover the full value of the paper.

NML holds about 1 billion USD worth of Argentine debt, which was acquired prior to the default, the firm said. NML did not participate in the 2005 restructuring.

The Argentine government has repeatedly slammed some of the funds that have sued, saying they did not lose money during the 2001-02 default because they bought the bonds later when they were dirt cheap.