MercoPress. South Atlantic News Agency

Judge Griesa to hear arguments from banks caught in Argentina/holdouts case

Griesa has received motions from the Bank of New York Mellon, the indentured trustee that currently holds a deposit from the Argentine government

US District Judge Thomas Griesa in New York said on Wednesday that he would hear arguments on July 22 related to the banks and payment agents caught up in the Argentine sovereign debt litigation with holdout speculative funds.

Griesa has received motions from the Bank of New York Mellon, the indentured trustee that currently holds a deposit from the Argentine government of 539 million in its account at the Central Bank of Argentina, on what it should do with the money.

In addition, the lead holdout NML Capital Ltd., a subsidiary of Elliott Capital Management, has filed a motion, as have bondholders with Euro-denominated Argentine debt, payment systems Euroclear Bank, Clearstream Banking and JPMorgan Chase bank.

The holdouts are investors who spurned the terms of Argentina's 2005 and 2010 debt restructuring following a 100 billion government default in 2002. Griesa has ordered that Argentina either pays the holdouts 1.33 billion plus accrued interest at the same time it pays restructured bondholders or no one should be paid.

Argentina has replied it is willing to pay 100% of its creditors in fair, equal, legal conditions and is requesting that Judge Griesa re-instate a stay injunction so that Argentina can pay the swapped bonds (for which is has until July 30), while it discuss terms with the holdouts.

The situation was again addressed by Argentine Cabinet Chief Jorge Capitanich who bluntly rejected once again any possibility of Argentina falling into default and reiterated the government’s willingness to negotiate.

This was in response to a new ad published in local newspapers by the so-called vulture funds through the American Task Force Argentina (ATFA), implying that Argentina was Argentina setting the basis for a new default.

“Argentina has not defaulted, it will not default, and it cannot default for one simple reason: Argentina pays and honors regularly and responsibly its commitments” Capitanich stressed Wednesday in his daily press briefing. “This is undoubtedly a deliberate strategy to prevent bondholders to receive payments already deposited [by the government]”.

The official reiterated that Argentina has not entered technical default, as holdout hedge funds say, which he described as “euphemism” developed by “national and international agents that intent to put Argentina in a place where it is not”. He also pointed out the irony in an alleged default “encouraged by creditors”.

Capitanich lashed out holdout funds for their ads “pretending to advise” Argentina on the best course of action. “They are truly cheeky,” he said. “None of the vulture funds invested a cent in Argentina, on the contrary, they acquired [the bonds] at a vile price to engage in this sort of [legal] actions”.

However, he reiterated once again the Argentine government’s willingness to talk and referred to the open dialogue between the government and the court-appointed mediator Daniel Pollack, including the Economy Minister Axel Kicillof’s meeting with him in New York.