Argentina threatens to sue US over default judgement

Argentina has threatened to sue the US at The Hague for judicial malpractice after an American court allowed two hedge funds to push the state into default, the Telegraph reports.

A New York judge ruled that Argentina must pay $1.5bn in arrears to “hold-out” investors who did not agree to a debt restructuring deal that was written up after the country defaulted on $93bn on Boxing Day 2001.

The judge made an order barring the country from making its regular interest payments to bondholders until the payment to the hold outs has been settled.

The Telegraph says many of the hold outs picked up the bonds extremely cheap in the global financial crisis.

Standard & Poor’s declared Argentina to be in “selective default” after last minute negotiations broke down on Wednesday.

Argentine stocks, especially banks, have been hit hard by the news and the shock also hit developed markets.

Argentina cabinet chief Jorge Capitanich labelled the judge “an agent” of speculative funds and raised the possibility of an appeal through the International Court of Justice. 

The country may also debate the issue at the United Nations.

“There’s been mala praxis here by the US justice system, for which all three branches of the government are responsible.” Capitanich says.

“Argentina has tried to negotiate in good faith. We can’t have a global financial system that lets a miniscule group of funds undermine the process of debt restructuring.”