Jan. 15 (Bloomberg) -- Alfonso Prat-Gay, a former governor of Argentina’s central bank, was granted permission by a U.S. appeals court yesterday to file a brief supporting his country’s effort to overturn a ruling that it must pay $1.33 billion to holders of defaulted bonds.
Prat-Gay, now a congressman representing Buenos Aires, said bondholders who haven’t sold the new bonds they received in a 2005 bond exchange have made a 58 percent profit, while Argentina’s per capita real GDP has risen 46 percent since 2005.
“This means that the average Argentine citizen is worse off than the average participating bondholder,” Prat-Gay said in a filing in the U.S. Court of Appeals in New York. “And the GDP warrant clock continues to click relatively more in the latter’s favor. How fair is that?”
A U.S. judge ruled that Argentina must pay the holders of its defaulted bonds if it proceeds with scheduled payments of more than $3 billion to owners of its restructured bonds.
U.S. District Judge Thomas Griesa in Manhattan ruled that Argentina must pay the money into an escrow account while an appeals court considers his rulings in the case. The appeals court ruled Oct. 26 that Argentina must pay holders of the defaulted notes if it pays off on its restructured debt.
Prat-Gay supports his country’s bid for a rehearing of that ruling, according to a court filing. Argentina defaulted on a record $95 billion of debt in 2001. In 2005 and 2010, the country offered to let holders of the defaulted bonds exchange them for new bonds at a discount of more than 70 percent, according to a brief filed in November in federal court in Manhattan by holders of the exchanged bonds.
The case is NML Capital Ltd. v. Republic of Argentina, 12-00105, U.S. Court of Appeals for the Second Circuit (Manhattan).
To contact the reporter on this story: Karen Gullo in San Francisco at email@example.com
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org