US Supreme Court rejects Argentine debt appeals

The US Supreme Court on Monday turned back Argentina's appeals against paying at least $1.3 billion to hedge fund investors in its defaulted bonds, piling pressure on the country's finances. The justices effectively upheld an August 2013 New York appeals court ruling that ordered Argentina to pay NML Capital and other hedge funds that had refused to participate in a restructuring deal for debt on which Buenos Aires defaulted in 2001. That opened the way for NML and others to seek immediate payment on 100 percent of the face value of the bonds they hold, even though most of the country's creditors took a huge writedown of their bonds to help the government rebuild its finances. Monday's ruling ‘is really the end of the road’ for Argentina to avoid payment, said Richard Samp, chief counsel at the Washington Legal Foundation, which supported the legal case of the hedge funds. ‘Really, there are only two options left to Argentina. It can try to negotiate some sort of payment terms with the holdout bond holders, or it can default on all of its foreign debt.’ Those prospects, and the strain that making higher debt payments could place on the Argentine economy, sent stocks and the peso tumbling in Buenos Aires. Argentine President Cristina Kirchner, who has stubbornly fought what she denounces as ‘vulture funds’ trying to destroy her country, was slated to address the issue on Monday evening. Buenos Aires had argued in court that a ruling for the hedge funds would force it back into default on its debt. But Ramiro Castineira, of the consultant Econometrica in Buenos Aires, downplayed that likelihood. ‘The market is only reacting to the possibility of whether the government will comply with the decision, and not over whether it has the capacity to pay. Because they know it does,’ he told AFP.