By Taos Turner
BUENOS AIRES--Argentina on Tuesday deposited the equivalent of
$161 million in interest payments owed to so-called restructured
bondholders, its latest effort to sidestep a U.S. court order
forbidding such payments.
The money was deposited in accounts at Nación Fideicomisos S.A.,
a local trustee Argentina chose to replace Bank of New York Mellon
Corp., which U.S. District Judge Thomas Griesa has blocked from
transferring payments from Argentina to the bondholders.
"By making these deposits, the Republic of Argentina once again
ratifies its unwavering commitment to meet all of its obligations
regarding the payment of bondholders," Argentina's Economy Ministry
said in a statement.
The payment was made to the owners of Par bonds who had agreed
to accept much less than they were owed on bonds that Argentina
defaulted on in 2001. Not all bondholders have approved Argentina's
plan to pay them locally, meaning Argentina could be declared in
default on the Par bonds.
The payment comes after Argentina deposited $539 million in June
at BNY Mellon for an interest payment on restructured bonds
governed by U.S. and U.K. law. Judge Griesa later said that deposit
was illegal because he had ruled that Argentina can't pay
restructured bondholders until it compensates hedge funds that
successfully sued the country in U.S. courts for failing to pay
them the full value of bonds that Argentina defaulted on more than
a decade ago.
To get around Judge Griesa's order, Argentina recently passed
legislation allowing it to pay restructured bondholders in
Argentina instead of New York, where the bonds were originally
issued.
On Monday, Judge Griesa declared Argentina in contempt of court
for its refusal to comply with his order. Argentina called the
contempt finding "absurd" and "illegal" and called on the U.S.
government to accept responsibility for the harm it has caused the
South American country.
Judge Griesa's order led Argentina to default on some of its
current bonds on July 30. This latest default could eventually
affect almost $29 billion in bonds the country issued overseas as
part of heavily discounted restructurings in which investors
swapped about 92% of eligible defaulted bonds for new debt in 2005
and 2010.
The default is also preventing President Cristina Kirchner's
government from borrowing abroad to ease hard currency shortages
that are pushing the economy deeper into recession.
Mrs. Kirchner is expected to address the matter in a televised
address later Tuesday.
Write to Taos Turner at taos.turner@wsj.com
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