MercoPress. South Atlantic News Agency

US federal judge rules in favour of Argentine sovereign bonds “holdouts”

New York Judge Thomas Griesa

A United States federal judge ruled in favour of seizing 105 million US dollars from the Argentine Central Bank deposits in New York in order to pay the debt the country holds with two investment funds.

The decision affects Argentine funds that have been frozen since 2006 and it was made known a week before a 20 billion USD debt-swap offer is launched, which remains from the massive debt default of 2001/2002.

Argentine Economy minister Amado Boudou said last week that the government will the offer public next April 14

”The plaintiffs' motives for embargoes and restrictions (...) are granted,“ said New York Judge Thomas Griesa in his ruling.

The plaintiffs in the probe are EM Ltd and NML Capital, the latter affiliated with Elliott Management Corp. and one of the largest holders of Argentine debt.

The planned swap aims to reconcile the country with the international financial market and to neutralize the demands of the so called ”holdouts,” who attempt to recover the total nominal value of the defaulted securities.

They rejected a previous offer made by the Government to swap its papers with a strong discount in 2005.

Argentine bonds in Buenos Aires deepened their losses up to an average of 0.5%, after the news was made known, and the country-risk measured by the JP Morgan bank rose 12 units to 626 basic points.

Before the investors may seize the funds, there must be further court proceedings and possibly an appeal by Argentina.