Argentina's Economy Minister Axel Kicilloff has deposited the next payment needed to avoid a default on government loans, but the payment was blocked by a U.S. federal court. Conway G. Gittens reports.
High drama as Argentina heads towards another default. A day after telling the United Nations uncooperative investors are trying to push Latin America's No. 3 economy in default, economy minister Axel Kicilloff says Argentina is making good on restructured debt payments. SOUNDBITE: ARGENTINA ECONOMY MINISTER AXEL KICILLOF (SPANISH WITH ENGLISH TRANSLATION) SAYING: "Argentina has proceeded with the payment of its bond service under foreign law for the equivalent of $832 million of which $539 million were deposited in the accounts numbered 15.098 and 15.002 of the Bank of New York Mellon [BONY] at the Central Bank of Argentina. Including the payments that are due today, in pesos, the payment made today was over 1 billion dollars." But a U.S. Federal court blocked the payment. The country is locked in a long-running legal fued with U.S. hedge funds that did not agree to re-work Argentina's debt obligations following a 2001-2002 default. These so-called holdout investors won a judgement that forces Argentina to payback $1.3 billion plus interest. SOUNDBITE: ARGENTINA ECONOMY MINISTER AXEL KICILLOF (SPANISH WITH ENGLISH TRANSLATION) SAYING: "There is no doubt about the bias of the judge in favour of the vulture funds [holdouts] nor their true intention: that of trying to bring the republic of Argentina to default and ruining the 2005-2010 restructuring that was reached after lengthy negotiations and a consensus of 92.4%. These negotiations, that the holdouts never wanted to participate in, an attitude that was definitively confirmed in the last week with the negative result for the solicitation of a stay for the Republic of Argentina to be able to have a dialogue under fair, equal and legal conditions with 100 percent of the creditors." Starting Monday, Argentina has a 30-day grace period to reach a settlement or officially default on loans, which will send borrowing costs surging.