South America

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.

Mauricio Cárdenas, Colombia’s finance minister, describes his government’s economic agenda with a nod to French economist Thomas Piketty, who argues for taxes on the rich to reduce the concentration of wealth in the hands of a few. “It is very important to collect revenues from the wealthiest Colombians to be able to invest in security and defence on the one hand, and in social sectors on the other hand,” he told the Financial Times in New York, between meetings with investors. Colombia is one of the world’s most unequal societies.

Brazil's federal prosecutors have filed criminal charges against Eike Batista, a once high-flying Brazilian businessman, compounding his legal troubles. Prosecutors in Rio de Janeiro charged Mr. Batista with financial crimes and requested the freezing of 1.5 billion Brazilian reais ($640 million) in assets belonging to the businessman and people close to him, according to documents posted on the public prosecutor's website. A judge will now examine the charges and decide if the case should go ahead, according to Sergio Bermudes, Mr. Batista's lawyer. Mr.

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.

President Nicolas Maduro said Venezuela could meet all its obligations to bondholders, as he sought to quell market fears that the Socialist-run country may opt to default when $5 billion of its foreign debt falls due for repayment next month, Reuters reported. Fears of a possible default had heightened, with bond yields spiking, after the publication of an article by two pro-opposition economists that suggested an orderly default could ultimately help the slumping economy of a member of the Organization of the Petroleum Exporting Countries.

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.

On Tuesday September 9 the United Nations General Assembly will meet to debate a new legal framework to serve as a guide for nations restructuring their debt, as is the current case with Argentina, teleSur reported. More than 130 developing countries have unanimously submitted a proposal to the United Nations calling for new legal rules to stop predatory financial speculators like vulture funds from undermining debt restructurings. If the motion is successful it could provide more efficient ways of dealing with government debt crisis.