U.S. judge orders freeze on Argentine pension investments

NEW YORK (Reuters) - A U.S. judge ordered the freezing of Argentine pension fund investments in the United States to satisfy a prior $554 million judgment against the South American country on behalf of holders of its defaulted sovereign debt.

Judge Thomas Griesa of U.S. District Court in Manhattan on Wednesday granted a request by bondholders to freeze the assets. Griesa asked representatives of Argentina to respond in court on Nov 6.

The judgment applies to 10 private pension fund management companies in Argentina that hold more than $1.4 billion in foreign assets including investments in the United States.

Argentine President Cristina Kirchner has sent to Congress a bill to take over the management of the $25 billion in the 14-year-old private pension fund system.

Court documents filed by Barry Ostrager, an attorney representing bondholder Aurelius Capital Partners, noted that there remains $554 million worth of unsatisfied prior judgments against Argentina on behalf of several bondholders.

The bondholders sued Argentina after refusing to accept huge losses in the country’s 2005 debt restructuring, three years after the biggest sovereign debt default in history.

It was not clear how much of the pension funds’ $1.4 billion in foreign investments is in the United States. Among the holdings are shares in companies such as Finland’s Nokia, beverage company Pepsico, and Spanish firms Repsol and Telefonica.

FUNDS MUST DEFEND THEIR ASSETS

In Argentina, an official said the investments did not belong to the government but to the Retirement and Pension Fund Administrators, known as AFJP.

“They are the ones that must defend those assets,” said Sergio Chodos, general manager of the Superintendency of Retirement and Pension Fund Administrators, a government oversight body.

“This is an attempt by vulture funds to take possession of these assets,” he said.

The government has already ordered the private pension funds to repatriate $500 million in Brazilian assets, and has said the additional $1.4 billion in foreign assets in the United States and elsewhere would also be brought home at some point.

In declarations to the court in the United States, Ostrager said the Argentine government plans to take over those funds for its own account, which authorizes U.S. courts to seize them for plaintiffs who won a judgment against the state of Argentina.

Griesa ordered the blocking of property in the United States “including but not limited to cash, deposits, real property, instruments, securities, security entitlements, security accounts, equity interests, claims, and contractual rights and interest” maintained in the name of the Argentine pension funds.

Argentine stocks, bonds and currency plunged last week after the government said it wanted to take over the privately-run pension funds, over concerns that liquidity would dry up on local markets where the funds are major players.

Markets also interpreted it as a government move to access funds to meet billions of dollars in debt obligations next year. Government officials say they want to protect retirement savings and have no need for the money in the pension funds.