The U.S. Court Allowed Argentina to Sell Bonds in Global Market
On Wednesday, the U.S. Court of Appeals in New York cleared Argentina to sell its $15 billion bond in the global market. Following the court decision, Argentina expects to issue the bonds within this week.
ABC News reported that the court's ruling has cleared the way for Argentina to settle its debts and strengthen its ability to maneuver in worldwide markets. In a three-judge panel, the court decided after oral arguments that last more than an hour to conclude whether Argentina had fulfilled the condition to sell its bond.
The judges saw that new Argentinian president Maurico Macri had changed the situation in Argentina after he took office last December. Therefore, judges decided to clear path for the country to sell its bond. Finance Minister of Argentina Alfonso Prat-Gay welcomed the court's decision.
"This is a step toward achieving normality and the kind of development that Argentina deserves," minister Pat-Gray told reporters in News York. Alfonso Prat-Gay is in New York for the country's first bond sale in more than 10 years.
Bloomberg reported the ruling puts an end to a long and bitter court battle that had blocked Argentina from either paying holders of its restructured debt or from issuing new bonds. Following the court decision, Argentina's benchmark bonds rose 2.2 cents to reach 123.82 cents on the dollar in New York, whille Argentina's benchmark stock index reached the highest level in five weeks.
Minister Pat-Gay said the country has plan to start receiving bond offers on Monday, selling them on the next day and paying the holdouts on Friday. Proceeds from sales of $15 billion bond sale will be used to pay the holdouts and other country's financial needs. That includes paying the past due interest to restructured bondholders and financing the infrastructure projects in Argentina.
Argentina changed drastically when president Mauricio Macri took office in December. U.S. District Judge Thomas Griesa said that the president's policy changed everything, as his predecessor president Cristina Fernandez de Kirchner had refused to negotiate with creditors and avoided to pay bondholders.
In February, the administration of president Macri made a public offer to pay $6.5 billion to settle $9 billion in holdout claims. The offer allowed bondholders to settle for original principal of their bonds plus 50%.
Argentina also faced a deadline on Thurday to pay $4.65 billion in settlements to four major creditors led by Aurelius Capital Management and Elliott Management's NML Capital Ltd. Reuters reported that lawyers from the hedge funds said they could wait longer and would not terminate the agreements on Thursday if Argentina did not make the payment on time.
As Argentina is cleared to sell its $15 billion bond, the country expects to issue the bonds within this week. On Wednesday, the U.S. Court of Appeals had decided to allow Argentina to sell its bond in the global market.