Argentina

A U.S. judge held Argentina in contempt of court on Monday, saying the republic was trying to find ways to circumvent a prior order requiring it pay holdout bondholders at the same time as other creditors who restructured their debt in recent years, Reuters reported. U.S. District Judge Thomas Griesa in Manhattan deferred a decision on imposing sanctions against Argentina to a later date. But he did say that the "problem is that the republic of Argentina has been and is now taking steps in an attempt to evade critical parts of" his injunction.

In its latest attempt to circumvent US courts, Argentina will seek to pay nearly $200m due on its restructured bonds by disbursing the money to investors next week via a local bank instead of Bank of New York Mellon, its trustee, the Financial Times reported. In response, holders of the country’s defaulted bonds have asked US District Judge Thomas Griesa to find the nation in contempt of court and fine it $50,000 for seeking to evade legal rulings that require Argentina to pay them in full if it also services its restructured debt.

Argentina’s battle with holdout creditors is taking on ever-broader dimensions as Cristina Fernández, the president, appeals for support from the UN this week after meeting billionaire George Soros and Pope Francis, the Financial Times reported. In New York, Ms Fernández hopes to recruit Mr Soros in her fight against the holdouts. His Quantum hedge fund holds a 3.5 per cent, or $450m stake, in YPF, the national oil company that would benefit from renewed access to international credit.

Argentina is holding a gun to the head of Citigroup, a lawyer for the bank told a three-judge panel in Manhattan on Thursday, the International New York Times DealBook blog reported. The bank has found itself in an awkward position: It must decide between defying a New York court order or a sovereign government, a move that it says would result in “grave sanctions” from Argentina. “We’re going to obey, and if we obey, we have a gun to our head and the gun will probably go off,” Karen Wagner, a lawyer representing Citigroup, said.

Argentina's Congress on Thursday passed a new bill designed to enable the government to resume debt payments to bondholders in defiance of a U.S. court ruling which tipped the country back into default, Reuters reported. President Cristina Fernandez's leftist government is in a race against the clock to make a $200 million coupon payment due on Sept. 30 to prevent the default spreading across bond series, which could raise the risk of investors calling for immediate payment on the principal value of their bonds. But she needs to route the funds through channels beyond the reach of the U.S.

Argentina is tightening its grip on the country’s currency market as international reserves decline following its second debt default in 13 years, Bloomberg News reported. Argentine banks must now seek government authorization for dollar purchases of $150,000 or more, down from a previous threshold of $300,000, according to three bank officials with direct knowledge of the matter. Central bank officials communicated the measure through telephone calls and instant messages to currency traders yesterday, two of the people said.

In the aftermath of the country’s default, Argentine president Cristina Fernández’s approval ratings jumped as she defiantly stood up to Argentina’s “holdout” creditors, who rejected debt restructurings accepted by 93 per cent of bondholders after the country’s previous default in 2001 and then won a US court order to be paid in full, the Financial Times reported.

Domingo Cavallo, the architect of Argentina’s first debt restructuring deal in 2001, has a solution for the country’s worsening debt drama: pay the holdouts, the International New York Times DealBook blog reported. “Argentina should comply with Judge Griesa’s decision,” Mr. Cavallo said on Wednesday at a conference to commemorate the 70th anniversary of the Bretton Woods system of global financial cooperation. Mr. Cavallo, who is also credited for slaying hyperinflation in Argentina in the early 1990s, was referring to the recent court decision by Judge Thomas P.

President Cristina Fernandez de Kirchner’s government faces a second national strike in less than five months, as a default last month threatens to aggravate quickening inflation and a plunging peso, Bloomberg News reported. Some state employees picketed at the main entrances to Buenos Aires from midday today and marched down 9 de Julio avenue in the city center. Truckers, train drivers, port workers and waiters are set to join them from midnight in a 24-hour strike in demand of higher wages and in protest at dismissals.

Argentina retaliated against Bank of New York Mellon on Monday for refusing to make payments to bondholders in compliance with a US court ruling – a move which has also led a group of hedge funds that includes George Soros’ Quantum Partners to sue the US bank, the Financial Times reported. The move by Buenos Aires, which cancels the banking licences of two local bank officials, follows a proposal sent to congress last week by President Cristina Fernández that aims to replace BNY Mellon as its trustee with a local state-run bank.