The U.S. Supreme Court rejected Argentina's appeak to overturn lower court's ruling that required the country to pay back defaulted bonds.
Yesterday the US Supreme Court rejected Argentina´s appeal to overturn a lower court's ruling that had required the country to pay back defaulted bonds held by a minority of hedge funds, known as hold out investors.
This requires the nation to pay back the so-called hold out investors at the full rate, in addition to the more than 92 percent of investors that had agreed to pay back at 25 percent of the face value of the bonds.
The Supreme Court also ordered that courts were able to make orders against banks to disclose the location of Argentine assets.
President Cristina Fernandez de Kirchner has refused to budge. “I think you need to distinguish between what is business and what is extortion. I think these two concepts are completely different... no president in a sovereign country can subject its country, its people to extortion”.
Argentina has been fighting with private hedge funds over bonds that the nation defaulted in 2001 after the largest economic crisis the country had seen.
The next debt payment is on the 30th of June. Argentina has three main options. Pay its restructured debt through a non US bank; pay everything – something which the Kirchners have always promised not to do, or default.
This ruling undermines the restructuring of debt for indebted nations and sets a precedent for private hedge funds being able to hold a sovereign nation to ransom.