MercoPress. South Atlantic News Agency

Aurelius Capital brands Argentine leaders 'outlaws' for flouting US courts orders

Tuesday evening President Cristina Fernandez revealed a plan to shift interest payments to holders of the country's restructured bonds to an Argentine bank

One of two hedge funds that sued Argentina over defaulted bonds branded the country's leaders “outlaws” on Wednesday after Buenos Aires moved to shift its bond payment method.

 “Argentina's leaders have literally chosen to be outlaws. They have chronically flouted US court orders, lied to our courts, and proclaimed utter disdain for our courts,” Aurelius Capital Management said.

On Tuesday evening President Cristina Fernandez revealed a plan to shift interest payments to holders of the country's restructured bonds to an Argentine bank processor rather than the Bank of New York Mellon, to shirt the freeze a New York judge put on BNY Mellon's processing those payments.

A ruling by the judge, Thomas Griesa, that Argentina must pay in full the hedge funds for their bonds at the same time it pays interest to restructured bond holders, and the subsequent freeze on the bank, forced the country into 'selective' default at the end of July.

That came even though Argentina had placed 539 million dollars in a BNY Mellon account to make a scheduled interest payment to creditors. Argentina has refused to pay the hedge funds, which refused to join the overwhelming majority of creditors in the 2005 and 2010 debt restructurings.

But Griesa has repeatedly insisted that the hedge funds (or 'vulture funds') be paid, complying with his ruling, and placed the freeze on BNY Mellon in order for force Argentina to comply with his judgments.

Aurelius, which together with NML Capital holds some 1.3 billion dollars worth of bonds which Argentina defaulted on in 2001, said the move Wednesday amounts to a violation of Griesa's order, and said it would further hurt the country's economy.

Argentine leaders “are now 'doubling down' on an illicit and failed approach,” it said. The hedge fund claimed that it was the Argentine people that were suffering most from the current impasse.

“Mistakes by the Republic's current leaders have already cost the Argentine people far more than what is owed to all so-called holdouts. These officials are now doubling down on an illicit and failed approach, as recommended last May by their US counsel,” the missive asserts.

“Contrary to government rhetoric, the only conspiracy that is harming Argentina's economy is composed of the nation's own leaders”, in direct reference to President Cristiana Fernandez and her Economy minister Axel Kicillof.

Besides offering to pay structured bond holders through an Argentine bank, President Cristina Fernandez announced that a second account would be opened in the bank and interest deposited on the 'holdouts', but under the same conditions as the 93% that accepted the country's bonds' swap.