Argentina’s president Cristina Fernandez has taken steps to introduce new legislation to avoid the US ruling that has stopped the Argentinian government from paying its creditors, Reuters reports.
Argentina has threatened to sue the US for judicial malpractice after an American court allowed two hedge funds to push the state into default.
Last month a US court blocked an interest payment worth $539m owed to bondholders who were issued debt that had been restructured under US legislation following Argentina’s default back in 2002.
Describing the current debt crisis as “a great moment of injustice in Argentina”, Fernandez last night unveiled plans for new legislation that aims to put the country back in control of its own debt management.
A draft bill for the proposed legislation outlined plans for defaulted debt to be swapped for new notes that are governed by Argentine law.
It says: “If bondholders decide – in individual or collective form – to ask for a change of the legislation and jurisdiction of their bonds … the economy ministry is authorized to implement a swap for new public bonds under local legislation, Fernandez said in a televised statement.”
Bank of New York Mellon would also be replaced by state-run Banco Nacion as the trustee for exchange bondholders under the proposed legislation.
Fernandez reassured that this new restructuring would keep to the terms of earlier bond swaps carried out back in 2005 and 2010.
However it is not yet clear whether this legislation will manage to successfully swerve the US court ruling in practice.