The judge also barred Argentina from paying other bondholders until it satisfies this judgment, putting the president’s back against the wall: If she doesn’t reverse her longstanding position and pay up, she risks triggering another historic Argentine debt default, this time totaling more than $20 billion.
“It is hardly an injustice to have legal rulings which, at long last, mean that Argentina must pay the debts which it owes. After ten years of litigation this is a just result,” U.S. District Judge Thomas Griesa concluded.
Griesa’s orders were delivered just before the long Thanksgiving holiday closed markets in New York until Monday.
Responding to the judge, Argentine Economy Minister Hernan Lorenzino said Thursday that it is not a fair decision to pay the vulture funds and that the government will continue to defend its position using all legal means.
“We believe that in the chamber new arguments will be presented on behalf of Argentina and all the bondholders who went before Griesa,” Lorenzino told reporters.
“If that’s the case, we’ll fight all decisions that are against the interests of our country,” Lorenzino said, adding that Argentina is ready to appeal to the U.S. Supreme Court.
“We still believe the U.S. justice system will fix this in a way that won’t affect Argentina, its legitimate creditors and, in an international context where the importance of these decisions is patent ... in terms of the financial international architecture,” he said.
Earlier in the day, Sen. Augustin Rossi, who leads the governing party’s bloc in Congress, told local radio that he thinks Argentina’s government would be within its rights to reject Griesa’s orders, “on behalf of all the Argentines, after we’ve made such an enormous effort to get out of default.”
Argentina’s president and the economy minister insisted earlier this week that her administration won’t pay a single dollar to the plaintiffs. But the judge gave Fernandez no room to maneuver meanwhile, lifting his stay and ordering that the money be put in an escrow account for the plaintiffs to collect.
“These threats of defiance cannot go by unheeded,” the judge wrote. “The less time Argentina is given to devise means for evasion, the more assurance there is against such evasion.”
If Fernandez refuses, the judge said that the Bank of New York, which processes Argentina’s bond payments, will find itself in violation if it doesn’t hold up payments to all other bondholders.
“It’s a mess. This does not help Argentina. Default could happen,” Goldman Sachs analyst Alberto Ramos in New York said Thursday. “The markets will react negatively to this.”