Business

Argentina deposits debt payment in defiance of US ruling

Argentina banner Image copyright Getty Images
Image caption Argentina is attempting to repay holders of its Par series of debt after defaulting on its Discount bonds

Argentina has deposited $161m (£99m) in bond interest payments with the state-controlled Nacion Fideicomisos bank, in an effort to skirt US court rulings.

The country had previously kept its funds with US-controlled Bank of New York Mellon.

The move comes a day after a US judge ruled Argentina was in "contempt of court".

That ruling stated Argentina must repay two US hedge funds before repaying other bond holders.

"By making this deposit, Argentina confirms once again its unshakeable commitment to meet its obligations to bondholders," said Argentina's finance ministry in a statement.

Argentina is attempting to pay its bondholders in a second tranche of debt known as the Par series so as to avoid defaulting once more.

However, experts caution that simply placing the debt payment in a non-US controlled bank is probably not sufficient to allow Argentina to avoid a US court ruling barring it from repaying certain debts above others.

Long fight

Argentina has been trying to repay the holders of its debt from when the country defaulted in 2001.

The majority of those bond holders have agreed to lower payments as a result of Argentina's bankruptcy.

However, two hedge funds - NML Capital and Aurelius Capital Management - have demanded full repayment of the $1.5bn (£920m) they are owed, and have sued to prevent the country from paying back only its restructured bonds.

After Judge Thomas Griesa sided with the hedge funds in a July ruling, Argentina was forced to default on its debt for a second time after refusing to repay the hedge funds.

Industrial woes

Argentina's flagging economy received further bad news on Tuesday, as figures showed industrial output fell at double the predicted rate in August.

Output shrank by 2.9% in seasonally adjusted terms, marking the 13th month of consecutive decline.

Analyst had forecast a drop of approximately 1.5%.

The fall is partly due to the weakness of the country's car-making industry.

Related Topics

More on this story