More Argentina Bondholders Seek Order Forcing Payment

Holders of about $700 million of defaulted Argentine bonds asked a court to force the South American nation to make good on its obligations to them at the same time it pays holders of its restructured debt.

The bondholders, who are plaintiffs in eight class actions against Argentina, are seeking a court order similar to one granted to holders of more than $1.5 billion in defaulted Argentine bonds, led by Paul Singer’s NML Capital and Aurelius Capital Management LP. That ruling requires they be paid whenever the nation makes a payment on its restructured debt.

The investors today filed papers in Manhattan federal court asking U.S. District Judge Thomas P. Griesa to order Argentina to make payments into escrow accounts on behalf of the investors represented in those suits. Because the nation is appealing orders defining who is included in the investors classes, the scope of the claims isn’t clear.

Carmine Boccuzzi, a lawyer for Argentina, didn’t immediately return an e-mail seeking comment on the court filing.

The request came as Argentina faces a possible July 30 default if it fails to reach an agreement with the NML group that would permit it to make a required interest payment on its restructured bonds. Argentina claims it faces as much as $20 billion in claims it can’t pay from holders of defaulted bonds.

The investors’ request is based on a clause in the bond agreements known as pari passu, which Griesa has ruled requires Argentina to give equal treatment to holders of its defaulted bonds and holders of debt issued in two restructurings, in 2005 and 2010. About 93 percent of Argentina’s creditors agreed to exchange their bonds for ones paying about 30 percent of what they were originally promised.

‘Same Footing’

“The plaintiff classes here should stand on the same footing as the NML and other plaintiffs for whom pari passu injunctions have been granted,” the class plaintiffs said in the court filing.

In a hearing June 27, Griesa denied a request by “me too” bondholders in five cases for orders similar to the one in the NML case.

“NML and Aurelius are not the only parties who may have rights under the pari passu clause,” Griesa said in the hearing. “But at this point, in order to have some sensible organization of settlement discussions and so forth, it seems to me that it is not a good thing for me to start signing additional orders.”

The case is Seijas v. Republic of Argentina, 14-01444, U.S. District Court, Southern District of New York (Manhattan).

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