By Juliana Castilla
BUENOS AIRES Nov 22 Argentina will appeal a U.S
federal court ruling ordering it to pay $1.33 billion to holdout
bond investors, the government said on Thursday, vowing to fight
"judicial colonialism" all the way to the U.S. Supreme Court if
The stakes in the years-long legal battle were raised when
New York federal judge Thomas Griesa on Wednesday ordered
Argentina to immediately pay bondholders who shunned two
exchanges of defaulted debt in 2005 and 2010.
As financial markets fretted about a possible new default
ahead for the South American county, Economy Minister Hernan
Lorenzino said the government will take the judge's ruling to
the U.S. Second Circuit Appeals Court on Monday.
Referring to the holdouts as "vultures" out to exploit
Argentina's massive 2002 sovereign default, Lorenzino said the
government will go to the U.S. Supreme Court or "whatever
international body that might be necessary" to press its case.
"To pay the vultures is not only unfair but illegal in terms
of our internal rules," he said. "We will continue to defend the
position of Argentina in all forums and with all available legal
Fears of a looming default on Argentine bonds sent all but
the bravest investors to the exits on Thursday.
Argentine bond spreads, measuring default risk against that
of safe-haven U.S. Treasury paper, grew 116 basis points wider
in thin Thanksgiving trade, according to JP Morgan's Emerging
Markets Bond Index Plus
Argentina's fiery left-leaning president, Cristina
Fernandez, had vowed her government will not pay "one dollar" to
In his ruling, Griesa cited threats by Argentina's leaders
to defy his rulings in the decade-old dispute.
"These threats of defiance cannot go unheeded," he wrote,
ordering Argentina to pay $1.33 billion to holdouts such as
Elliot Management Corp's NML and Aurelius Capital Management by
He said the less time Argentina was given "to devise means
for evasion, the more assurance there is against such evasion."
If Griesa's ruling is upheld by an appeals court and
Argentina still refuses to pay, U.S. courts could eventually
block debt payments to creditors who took part in the debt
restructurings out of consideration for investors who rejected
Argentina's terms at the time.
That would trigger a technical default on approximately $24
billion worth of debt issued in the 2005 and 2010 exchanges,
although Argentina has said it will keep making routine
repayments and that funds deposited for creditors within the
South American country cannot be seized.
Lorenzino decried Griesa's ruling as "a kind of judicial
"Someone is sitting in a courtroom in a very important
country making decisions that go against the laws and
institutions not only of Argentina but other countries as well,"
he said. "The only thing we're missing is for Griesa to send in
the Fifth Fleet."
The litigation saga has lasted more than 10 years and now
appears to be favoring the holdouts.
Fernandez's government has consistently refused to pay
bondholders who failed to swap their defaulted paper at a steep
discount, or "haircut".
But it has come under intense pressure since a U.S. appeals
court upheld Griesa's decision in February that Argentina
violated equal-treatment provisions for all creditors when it
chose to pay exchange bondholders and not holdouts.
NML and Aurelius, the holdouts with the largest claims on
unrestructured debt, are owed approximately $1.33 billion.
"Argentina owes this and owes it now," Griesa said in his
ruling. "It should be emphasized that these are debts currently
owed, not debts spaced out over future periods of time."