* Legal wrangling had stirred market fear of a debt crisis
* Argentine wants to avoid paying $1.33 bln to "holdouts"
By Daniel Bases
NEW YORK, Nov 28 Argentina won a reprieve
against having to pay $1.33 billion next month to "holdout"
investors who rejected a restructuring of its defaulted debt and
have waged a long legal battle to get paid in full.
A U.S. appeals court granted an emergency stay order on
Wednesday that gives Argentina more time to fight a debt ruling
favoring the holdout creditors, and eases investor fears of a
new default as early as next month.
Last week, U.S. District Judge Thomas Griesa ordered
Argentina to deposit the $1.33 billion payment by Dec. 15 for
investors who rejected two restructurings of bonds left over
from its massive 2002 default.
The South American country swiftly appealed, but fears rose
of a technical default on payments to bondholders who agreed to
take a steep haircut in two debt exchanges in 2005 and 2010.
However, the 2nd U.S. Circuit Court of Appeals put off any
decision until well into 2013 on whether or not Argentina will
have to pay investors who did not participate in those
restructurings, which paid less than 30 cents on the dollar.
Both Argentina and bondholders who took part in the
exchanges filed appeals to the 2nd Circuit against Griesa's
The appeals court will hear oral arguments on Feb. 27. Its
decision on Wednesday effectively halts the order by Griesa that
could have led to a technical default on approximately $24
billion worth of debt.
"The threat of default has been removed for now," said
Ignacio Labaqui, who analyzes Argentina for emerging markets
consultancy Medley Global Advisors.
"This is really good news for Argentina and exchange bond
holders," he added. "The ruling came faster than expected, which
sends the message that Griesa's decision may have been too
harsh, from the point of view of the appeals court."
Lead holdout investors Elliott Management Corp and Aurelius
Capital Management both declined to comment on the 2nd Circuit's
There was no immediate reaction from the Argentine
government. Lawyers for the holders of Argentina's exchanged
bonds welcomed the 2nd Circuit's order.
"The stay ensures that the exchange bondholders will receive
their rightful payments through December, and until the Court
can carefully consider the significant issues and interests that
are involved before rendering its final ruling," said the
statement from law firm Boies Schiller & Flexner LLP.