Argentina to appeal whole bond decision-media

Sun Nov 25, 2012 10:03am EST

* U.S. courts orders gov't to pay holdout bond investors

* Holdouts want full repayment of defaulted debt

* Gov't says court order would scuttle future restructurings

BUENOS AIRES, Nov 25 (Reuters) - Argentina will to go an appeals court in New York on Monday to challenge the ruling of a U.S. judge who last week issued a decision that raised the specter of a technical default by the South American country, a newspaper said.

A decade after committing the biggest sovereign default in history, Argentina faces another crisis after a U.S. court ordered it to pay $1.3 billion to holders of defaulted bonds.

About 93 percent of Argentine bondholders agreed in 2005 and 2010 to swap defaulted debt from the 2002 default for new paper at a steep discount. So-called "holdout" creditors who rejected the swaps continue to battle in the courts for full repayment.

U.S. District Judge Thomas Griesa on Wednesday ordered Argentina to pay the holdouts.

Rather than trying to chip away at the edges of Griesa's order, Argentina's lawyers plan to challenge the whole opinion on Monday in the U.S. 2nd Circuit Court of Appeals, according to an article in the Sunday edition of Argentine newspaper Pagina 12, which has close ties to the government.

The argument to be put forth by Argentina "is simple and compelling," the article said, citing information from the government, which has vowed never to pay the holdouts.

"If the court accepts the Griesa's view, no country will be able to successfully restructure debt, as Argentina did, with significant reduction in interest and extension of payment schedules," the story said.

"None of the owners defaulted bonds would enter the exchange pending a court ruling that allows recovery of the whole of their claims," it said.

Griesa's Wednesday decision cited an appeals court ruling that said Argentina had discriminated against the holdouts. Now the 2nd Circuit Court of Appeals will decide if Griesa's order should be carried out, considering the ramifications to the financial system.

The holdout investors in the case are led by NML Capital, an affiliate of Elliott Management, and Aurelius Capital Management, both based in New York.

At stake for all exchange bondholders is a potential technical default on approximately $24 billion worth of debt issued in the 2005 and 2010 exchanges. Principal and interest payments due those bondholders next month total more than $3 billion.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article