US Federal Judge Thomas Griesa, ratified on Friday through an official letter that Argentina’s proposal to carry out a debt exchange and pay its bondholders in Buenos Aires represents a “violation of the rulings and procedures.”
A few hours after Argentine President Cristina Fernández announced her administration is willing negotiate with bondholders in New York, Judge Griesa warned against changing the payment jurisdiction, as Economy Minister Axel Kicillof suggested last Tuesday during a press conference.
In that sense, the brief two paragraphs document signed by the magistrate expressed the Government’s proposal “is in violation of the ruling and procedures now in place in the Southern District of New York, and the Republic of Argentina is prohibited from carrying out the proposal of the Economy Minister.”
Last Monday, the US Supreme Court declined to take Argentina’s case against the so called holdout hedge funds (or ‘vulture funds’), putting the country one step closer to a financial default.
In a Monday speech President Cristina Fernandez managed to infuriate Judge Griesa when she used the word extortion and extortionists in reference to Argentina's holdout creditors.
“Now that really does not give me confidence in a good faith commitment to pay all the obligations of the Republic” said Judge Griesa in reference to the Monday speech, which he described as “unfortunate”.
Argentina had considered as one of the possible scenarios changing the jurisdiction for the payment of restructured bondholders at the end of the month, thus avoiding embargoes on those funds. However the operation is quite complex and needs the approval from a high percentage of those bonds holder.
According to political and financial analysts, the prohibition warning from Griesa is also directed to those banks that might had plans to support Argentina's decision.