US court ruling leaves Argentina to pay back holdout funds in full

THE US Supreme Court dashed Argentina’s hopes of a further appeal on its debt restructuring yesterday, leaving the country liable for a looming $1.33bn (£780m) payout to hedge funds.

The highest US court’s decision not to hear the Argentinian government’s case against creditors that rejected previous debt restructuring means that it may be faced with another default.

Most of the creditors from the country’s 2001-2002 crisis agreed to major write-downs in 2005 and 2010, but around seven per cent rejected the deal. Two hedge funds, Aurelius Capital Management and NML Capital, were the main holdouts.

Argentina’s next payment on its bonds is due at the end of June, and previous US courts have ruled that the country must reimburse the investors that held out before making payments to other bondholders.

The Buenos Aires Merval stock index dropped by just over 10 per cent during the day, wiping out several weeks of gains.

In its appeal to the Supreme Court, Argentina said that making the payments would lead to a “serious and imminent risk of default”, but that it would continue to honour its existing commitments.

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