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People walk in front of Casa Rosada Presidential Palace in Buenos Aires on Friday. (MARCOS BRINDICCI/Reuters)
People walk in front of Casa Rosada Presidential Palace in Buenos Aires on Friday. (MARCOS BRINDICCI/Reuters)

Argentina to pursue $500-million during bond hearing in New York Add to ...

A New York judge called a new hearing in the Argentina bonds case for Friday, after Buenos Aires sued the United States in the International Court of Justice for allegedly being forced into default.

Justice Thomas Griesa ordered that Argentina and hedge funds battling to be paid on their bonds meet in his court on Friday “regarding recent statements made by the Republic of Argentina.”

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Argentina is battling to have Justice Griesa free up more than $500-million (U.S.) in funds in an account of Bank of New York-Mellon at the Argentine central bank.

The Argentine government deposited the money there at the end of June as an interest payment for holders of the country’s restructured bonds.

But Justice Griesa ordered the bank not to pay the money unless Argentina also pays the hedge funds for the $1.3-billion in unrestructured bonds they hold, and that forced the country into default at the end of July.

Argentina is refusing to pay the hedge funds, and has now accused the bank of breach of contract in its assigned role of handling its debt payments.

Argentina also asked the world court in The Hague on Thursday to take action against the United States over Argentine sovereign debt in the South American country’s long-running dispute with holdout creditors.

Argentina defaulted last week after losing a long legal battle with hedge funds that rejected the terms of debt restructurings in 2005 and 2010.

A statement issued by the International Court of Justice, the UN’s highest court for disputes between nations, said Argentina’s request had been “transmitted to the U.S. Government. However, no action will be taken in the proceedings unless and until” Washington accepts the court’s jurisdiction.

The United States has recognized the court’s jurisdiction in the past, but it was not immediately clear if it would do so in Argentina’s case.

The default came after Argentina failed last week to strike a deal with the main holdouts among investors, NML Capital Ltd, an affiliate of Elliott Management Corp and Aurelius Capital Management.

Buenos Aires maintains it has not defaulted because it made a required interest payment on one of its bonds due 2033, but a judge in the U.S. district court in Manhattan blocked that deposit in June, saying it violated an earlier ruling.

Argentina said in its application to the court that the United States had “committed violations of Argentine sovereignty and immunities and other related violations as a result of judicial decisions adopted by U.S. tribunals.”

Latin America’s third-largest economy defaulted on about $100-billion on sovereign bonds in 2002. Most holders of those bonds accepted less than 30 cents on the dollar in the 2005 and 2010 restructurings. But a minority of holders opted to sue in the U.S. courts for full repayment.

Washington lost a suit filed by Mexico at the international court, which ruled in 2004 that the United States had violated the rights of death row inmates by denying them the right to consular legal representation.

In other developments, a group of so-called “me-too” holdout investors have already asked a Justice Griesa to grant them equal treatment amid hopes of a potential deal to allow international banks to buy defaulted debt from hedge funds led by Elliot Capital Management and Aurelius Capital.

- With a report from Reuters

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