Citibank “must obey Argentine laws” in bond payments
23 March 2015 Buenos Aires
Image: Shutterstock
Argentine President Cristina Fernandez has said that Citibank “must obey Argentine laws” and pay its bond holders, despite a ruling in a US federal court forbidding the payments.
The New York decision stops the bank from passing on interest payments to Argentinian bondholders.
The issue stems from Argentina’s $100 billion debt default in 2001. While the majority of creditors agreed to accept exchange bonds at a write-down, two US hedge funds sued Argentina for full repayments, and won.
Last week, the US district court judge ruled that Citibank should not issue interest repayments to Argentine bond holders, based on a previous ruling that prohibits institutions from assisting Argentina in servicing debt, without also paying the US hedge funds in question.
Fernandez has challenged the decision, saying that banks operating in Argentina must adhere to the country’s laws. Since the ruling, Citibank has revealed plans to leave the custody space in Argentina as soon as possible.
The New York decision stops the bank from passing on interest payments to Argentinian bondholders.
The issue stems from Argentina’s $100 billion debt default in 2001. While the majority of creditors agreed to accept exchange bonds at a write-down, two US hedge funds sued Argentina for full repayments, and won.
Last week, the US district court judge ruled that Citibank should not issue interest repayments to Argentine bond holders, based on a previous ruling that prohibits institutions from assisting Argentina in servicing debt, without also paying the US hedge funds in question.
Fernandez has challenged the decision, saying that banks operating in Argentina must adhere to the country’s laws. Since the ruling, Citibank has revealed plans to leave the custody space in Argentina as soon as possible.
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