Mexico will support Argentina’s bid
for U.S. Supreme Court review of an appellate ruling that the
owners of repudiated bonds must be paid in full when the South
American country makes payments on its restructured debt,
Finance Minister Luis Videgaray said.
The Aug. 23 ruling by a federal appeals court in New York
could threaten future sovereign debt restructurings, Videgaray
said in an interview at Bloomberg’s Economic Summit in Mexico
City. The Supreme Court has been notified of Mexico’s intent to
submit a friend-of-the-court brief, due March 24, he said.
“We believe there’s a real risk that a Supreme Court
decision against Argentina’s interests could create a precedent
that would make future sovereign restructurings much more
difficult and costly,” Videgaray said.
Argentina filed a petition on Feb. 18 asking the Supreme
Court to take the case, saying the order blocking payments on
restructured bonds until the untendered debt is paid threatens
to force a new default. It also argues that the appeals court
didn’t properly apply the Foreign Sovereign Immunities Act,
which limits suits against foreign governments.
Under the Supreme Court’s normal scheduling practices, it
won’t act on the appeal until at least the end of May. They
would hear arguments and rule during the nine-month term that
starts in October.
Argentina defaulted on $95 billion of bonds in 2001. While
about 93 percent of creditors accepted losses of 70 cents on the
dollar in the country’s 2005 and 2010 debt restructurings,
holdout investors including hedge fund Elliott Management Corp.
sued for full repayment and won.
The extra yield investors demand to own Argentine
government bonds instead of U.S. Treasuries narrowed 0.13
percentage point to 8.61 percentage points today, according to
data compiled by JPMorgan Chase Co.
The Supreme Court case is Argentina v. NML Capital, 13-990.
The lower court case is NML Capital Ltd. v. Republic of
Argentina, 12-00105, U.S. Court of Appeals for the Second
Circuit (New York).
To contact the reporters on this story:
Eric Martin in Mexico City at
emartin21@bloomberg.net;
Katia Porzecanski in New York at
kporzecansk1@bloomberg.net
To contact the editors responsible for this story:
Brendan Walsh at
bwalsh8@bloomberg.net
Richard Richtmyer
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