Bond battle gets bitter as judge holds Argentina in contempt

 
Tim Wallace
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ARGENTINA has been held in contempt of court by a US judge after the country ignored a ruling ordering it to pay the bondholders who had refused to take part in the state’s debt restructuring.

The ruling underlines how bitter the long-running case has become, making it increasingly difficult for the government to back down or reach a negotiated settlement.

A group of hedge funds has held out against the 2001 default, taking the Argentinian government to court over its failure to pay its debts.

The bonds were issued under US law in an attempt to guarantee investors Argentina could not default. This summer a New York court ruled the government had to pay the hold-outs $1.3bn (£800m) at the same time as it paid the investors who agreed to the restructuring.

But the country passed new laws to avoid complying with the ruling.

The government had argued it is not possible under international law to hold a government in contempt.

Argentina’s lawyer said the action would not help the parties reach a solution on the long-running row, warning the ruling would “make matters worse”.