August 26, 2013 / 11:43 PM / in 4 years

Argentina to offer debt swap changing bond payments

BUENOS AIRES, Aug 26 (Reuters) - Argentina will offer a bond swap on restructured sovereign debt to shift payments to Buenos Aires, President Cristina Fernandez said on Monday, in an attempt to avoid the impact of U.S. court rulings that threaten to interrupt payments.

The voluntary swap covering debt in all foreign markets would only take place if Argentina’s ongoing appeals of the U.S. court rulings are rejected, a government source told Reuters on condition of anonymity.

Argentina on Friday lost its appeal of a U.S. court order requiring it to pay $1.33 billion to hedge funds that refused to accept steep discounts when the nation restructured its debt in the years following a massive default in 2002.

The 93 percent of bondholders who accepted restructurings in 2005 and 2010, receiving less than 30 cents on the dollar, worry that Argentina’s refusal to pay bond “holdouts” in the face of the court orders could result in a freeze on the payment of restructured bonds.

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