Holders of Argentine Euro-Bonds Ask to Join U.S. Appeal

Holders of Argentina’s euro-denominated bonds asked a U.S. appeals court to let them join an appeal of a Manhattan federal judge’s rulings in litigation over defaulted debt.

Knighthead Capital Management LLC, Redwood Capital Management LLC and Perry Capital LLC, which claim they hold more than $1.6 billion in the Euro bonds, asked the U.S. Court of Appeals in New York yesterday to allow them to join Argentina’s appeal of a judge’s decisions in the dispute over $1.3 billion in defaulted Argentine bonds.

U.S. District Judge Thomas Griesa in Manhattan ruled Nov. 21 that Argentina had to pay the $1.3 billion, which is claimed by holders of the defaulted debt, into an escrow account by Dec. 15 if it made about $3 billion in scheduled payments on the restructured debt this month. The rulings sparked a rout in Argentine bonds and caused Fitch to cut ratings on the country’s debt.

“Because the district court made no attempt to tailor those orders, they would apply to all of the Republic’s alleged ‘agents and participants’ anywhere in the world -- even parties that disburse monies to the holders of the euro bonds and reside outside of the U.S., beyond the jurisdiction of the district court,” the euro bond holders said in their court filing.

Argentina is appealing Griesa’s decisions, supported by investors who participated in two debt restructurings. Bank of New York Mellon Corp., the trustee for the restructured bonds, has also asked the court for permission to participate in the appeal.

The appeals court last week delayed the effect of Griesa’s orders and set Feb. 27 for oral argument in the case.

The case is NML Capital Ltd. v. Republic of Argentina, 12-105, U.S. Court of Appeals for the Second Circuit (Manhattan).

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