Argentina Bans on Bond Payments Dropped by U.S. Judge

  • Country said it has met conditions needed to lift injnctions
  • Move allows Argentina to proceed with $15 billion bond sale

Argentina’s officially back in the international credit markets.

A judge overseeing lawsuits tied to Argentina’s 2001 sovereign debt default dropped orders barring the nation from issuing bonds and sanctioning its return to the global debt markets after a 15-year absence.

U.S. District Judge Thomas Griesa’s order came after the world’s eighth-largest country said it dropped a law barring payment to holdout creditors and paid bondholders who settled earlier this year, including a $2.3 billion deal with Paul Singer’s Elliott Management Corp. The judge set those conditions for the orders to be dropped.

Argentina now can go ahead with a planned $15 billion bond sale to pay off the holdout creditors from a 2001 default.

“We had a mandate from the people of Argentina, which told us, we no longer want to be part of the previous framework, we want to be part of the world,” Finance Minister Alfonso Prat-Gay said at an April 19 news conference. “We’re entering a new phase, where Argentina can set sail, leaving the troubled waters behind and focusing on everything we’ll be able to do to transition into a growing, orderly economy.”

Argentina’s defaulted bonds due 2033, which trade with accrued interest, fell 0.8 cent to 126.9 cents on the dollar at 11:07 a.m. in New York, after eight days of gains that brought the bond to a record high on April 21.

Elliott and other hedge funds won the injunctions to block Argentina from paying on its restructured debt to try to force the nation to the negotiating table. They triggered a new default in 2014 when Argentina refused to pay the hedge funds.

After the election of Argentine President Mauricio Macri in December, the county reopened talks with the hedge funds and settled. Macri’s predecessor, Cristina Fernandez de Kirchner, had refused to negotiate and Argentina frequently defied the orders of U.S. judges.

The case is NML Capital v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan).

Before it's here, it's on the Bloomberg Terminal.