Reuters/New York
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Citigroup plans to ask a US judge to put on hold an order barring it from processing payments on $8.4bn in bonds issued under Argentina’s local laws following its 2002 default.
A lawyer for the bank told US district judge Thomas Griesa of its plans during a hearing in New York on Friday just hours after a federal appeals court dismissed its appeal of Griesa’s July injunction.
“As your honour knows, we are facing a payment deadline of September 30, so we are likely also to move for a stay,” said Karen Wagner, a lawyer for Citigroup, according to a transcript obtained yesterday.
Argentina defaulted again in July after refusing to honour court orders to pay $1.33bn plus interest to bondholders suing for full payment on defaulted bonds.
Citigroup has said it faces regulatory and criminal sanctions by Argentina if it cannot process a $5mn interest payment due to bondholders by September 30.
No other parties were present at Friday’s hearing, and Wagner said, as a result, she would not give more detail about the substance of Citi’s positions.
But she said the bank planned to ask Griesa to reconsider his ruling or modify the injunction.
Citibank has argued it should be able to process payments it received from Argentina on bonds issued under local law.
Griesa, however, on July 28 blocked Citi from processing payments on US dollar-denominated bonds issued under Argentine law.
After Citigroup and Argentina appealed, the 2nd US Circuit Court of Appeals in New York on Friday ruled it did not have jurisdiction.
Griesa, hours later, said he planned to hold a hearing this week and that the parties should be prepared to address his view that bonds governed by Argentine law are “different” than other bonds at issue in the litigation, according to the transcript.
Danielle Romero-Apsilos, a spokeswoman for Citigroup, confirmed yesterday that the bank “will seek to argue our case on an emergency basis in front of judge Griesa this week, given the impending September 30 payment date.”
The bondholder plaintiffs, led by Elliott Management’s NML Capital Ltd and Aurelius Capital Management, had spurned the country’s 2005 and 2010 debt restructurings, which resulted in exchanges for about 92% of the country’s defaulted debt. Investors who exchanged bonds were paid less than 30 cents on the dollar.
The country’s most recent default came after the US Supreme Court declined to hear Argentina’s appeal of a ruling that it must pay the holdouts when it paid holders of the exchanged bonds.
Griesa subsequently blocked Bank of New York Mellon Corporation from processing a $539mn interest payment on what the country says is over $28bn in debt. The order led to default after no settlement was reached. Representatives for NML and Aurelius either did not immediately respond to requests for comment or had no immediate comment.
