Buenos Aires - The Argentine government ordered Bank of New York Mellon on Monday to give it back $539 million (R6 billion) frozen in connection with the country's debt dispute with two US hedge funds.
US federal judge Thomas Griesa ordered the money frozen in a Bank of New York account after ruling that Buenos Aires could not proceed with payments on the debt it restructured following its 2001 economic crisis until it settled its $1.3-billion dispute with the two “holdout” creditors.
The decision has infuriated Argentina, and caused it to default on its debt for the second time in 13 years on July 30.
A $539-million interest payment it tried to make to restructured bondholders is meanwhile sitting untouched at Bank of New York Mellon, which says it must obey the New York district court judge's order to hold it there.
“The Republic of Argentina has ordered Bank of New York Mellon to transfer and return all assets and funds currently under its control,” Buenos Aires said in an advertisement in Argentine newspapers.
The government said it had also ordered the bank to step down as payment agent for its restructured debt.
Argentina defaulted on $100 billion in debt in 2001, the largest default in history at the time.
It persuaded 93 percent of its creditors to take losses of up to 70 percent on the face value of their bonds in deals reached in 2005 and 2010.
But hedge funds NML Capital and Aurelius Capital Management refused to accept the write-down and took Argentina to court, winning a ruling that has derailed the country's debt restructuring.
Later Monday, Argentine President Cristina Kirchner was due to meet billionaire investor George Soros, one of the restructured bondholders whose interest payments have been frozen, to discuss a plan to get out of default.
Kirchner is in New York to address the UN General Assembly on Wednesday, when she will likely hammer home her country's calls for a UN convention to stop “vulture funds” from scuppering restructuring plans for countries struggling to pay their debts.
She also sought to rally fellow Argentine Pope Francis to the cause during a meeting Saturday at the Vatican. - Sapa-AFP