Argentina Appeals Block on Payment of Some Performing Debt

Updated on

Argentina has appealed a court ruling blocking Citibank NA from processing payments on U.S. dollar-denominated bonds issued under that nation’s laws as it continues to fight holders of its defaulted debt.

The ruling last month by a federal judge in New York prevented Citibank from participating in a March 31 payment and placed a new legal obstacle in the way of the cash-strapped nation’s attempts to keep financing itself in dollars, restricting it to domestic bond sales.

Citibank argued that a 2012 ruling blocking Argentina from paying holders of its performing debt didn’t apply to it. Failure to make the payment would force the bank to violate Argentine law and endanger its ability to do business in the country, Citibank said.

U.S. District Judge Thomas Griesa rejected the arguments, ruling U.S. dollar-denominated bonds issued in Argentina under that country’s law are covered by the 2012 ban. In the 2012 ruling, Griesa said Argentina can’t pay holders of the performing debt without also paying a group led by Paul Singer’s NML Capital that’s owed $1.7 billion on the country’s defaulted bonds.

Argentina is asking the federal appeals court in New York to reverse last month’s ruling.

The case is NML Capital Ltd. v. Republic of Argentina, 08-cv-6978, U.S. District Court, Southern District of New York (Manhattan).

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