* Appeals court halted $1.33 bln payment order on Wednesday
* Holdouts want court to order Argentina to post bond
* They say Argentina won't comply, plans to evade rulings
* Markets watch case closely, fear possible default
Dec 1 Investors suing over Argentina's 2002 debt
default have asked a U.S. court to order the country to post a
security deposit of at least $250 million by Dec. 10, while an
appeal of a lower court's order is pending.
In an emergency motion filed late on Friday, the "holdout"
creditors urged the 2nd U.S. Circuit Court of Appeals to modify
its ruling from Wednesday that halted an order for Argentina to
deposit $1.33 billion into an escrow account by Dec. 15 on the
The decision eased fears that Argentina could default in the
coming weeks, but the holdouts say it is too lenient and gives
the government more time to plot a way around court rulings.
Officials at the Argentine Economy Ministry declined to comment.
The holdouts are seeking to be repaid in full on their
defaulted Argentine bonds after spurning debt exchanges in 2005
and 2010 that about 93 percent of other bondholders accepted.
Argentina calls the litigating funds "vultures" and has vowed
never to pay them.
The latest battle centers on a ruling that found Argentina
violated a bond provision requiring it treat all creditors
equally when it paid the exchange bondholders without paying the
holdouts. Two U.S. courts have said they should all be paid
On Nov. 21, U.S. District Judge Thomas Griesa ordered
Argentina to deposit the $1.33 billion for holdouts including
NML Capital Ltd and the Aurelius Capital Management funds by
Dec. 15, the same day about $3 billion comes due on
growth-linked GDP warrants, issued during Argentina's debt
This raised fears of another default because if Argentina
had refused to pay the holdouts, as expected, U.S. courts could
have disrupted payments to the holders of restructured bonds.
Argentina appealed the orders and won an emergency stay, or
halt, from the 2nd Circuit Court.
NML and Aurelius argue, however, that Argentina should have
to post a security deposit of $1.45 billion, or at least $250
million, by Dec. 10 to ensure the country complies with the
court orders if it loses the appeal.
"If Argentina refuses to post even that minimal security
even as it prepares to pay more than $3 billion to exchange
bondholders, that will amply demonstrate its intention not to
comply with this court's mandates and that the stay should be
lifted," lawyers for the holdout investors wrote.
The funds cited statements by Argentine officials saying
they would not pay the holdouts but would keep servicing the
restructured bonds as evidence they plan to evade the rulings by
creating an alternative payment scheme for exchange bondholders.
The country will not have to pay anything on its
restructured debt again until March 2013, when interest comes
due on its Par bonds.
"The emergency giving rise to this motion is that if
Argentina is not required to post security as a condition for
maintaining the stay when its December 2012 payments on the
exchange bonds come due, Argentina will have at least an
additional three months to continue developing its scheme to
attempt to evade the injunction," the holdouts' lawyers wrote.
They said if the 2nd Circuit does not agree that Argentina
must make a security deposit, then it should consider expediting
the case so that it can be resolved before Dec. 31, when the
country must pay $500 million to service restructured bonds.