U.S. judge says might lift Argentina debt injunctions if permitted

NEW YORK (Reuters) - The U.S. judge overseeing Argentina’s litigation with hedge funds holding its defaulted bonds on Friday signaled his willingness to lift injunctions that restrict the country from paying off some debts, provided that he regains jurisdiction to do so.

A pedestrian looks at currency exchange rates board at a money exchange in Buenos Aires' financial district, Argentina, December 17, 2015. REUTERS/Enrique Marcarian

U.S. District Judge Thomas Griesa in Manhattan said it would serve the public interest to lift the injunctions, provided that Argentina repeals two laws concerning its debts and pays creditors who agree by Feb. 29 to settle.

He also praised Argentina’s progress toward settling and the “sincerity and good faith” it has shown.

At issue were injunctions favoring so-called “me-too” plaintiffs in 49 lawsuits seeking the same relief as so-called holdout bondholders, including hedge fund manager Paul Singer’s NML Capital Ltd, who have demanded full repayment.

Griesa noted that he cannot now vacate the injunctions because of a pending appeal by Argentina with the 2nd U.S. Circuit Court of Appeals in Manhattan.

But his decision is a victory for the country, which has been hamstrung from returning to global capital markets by his earlier rulings requiring that it fully pay holders of defaulted bonds that were not restructured in 2005 and 2010 debt swaps.

Griesa said a key turning point was the recent election of Mauricio Macri to succeed Cristina Fernandez as Argentina’s president.

Fernandez refused to negotiate with holdouts, who she termed “vultures,” but Macri has worked toward settlements as part of his plan to improve the country’s economy.

“Put simply, President Macri’s election changed everything,” Griesa wrote.

Earlier this month, Argentina offered to pay $6.5 billion to settle the whole dispute.

Some bondholders have agreed to settle, through mediation led by court-appointed arbiter Daniel Pollack, but the main holdouts including NML have not done so.

In his decision, Griesa praised Pollack for having performed “with great skill,” and said his work “will undoubtedly be of great value in the ultimate resolution of this litigation. He has the thanks of the court.”

NML and lawyers for Argentina declined to comment.

Reporting by Jonathan Stempel in New York; Additional reporting by Nate Raymond; Editing by Cynthia Osterman