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Argentina Makes Local Debt Payment Deposit, Defying Angry U.S. Judge, Paul Singer

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On Tuesday, Argentina deposited a $161 million bond interest payment with a local trustee, in open defiance of a contempt call by a U.S. judge who said the move would be illegal, Reuters reported.

Argentina’s intent is to show that it is willing and able to service its debt, and that if lenders should blame anyone for its failure to pay them last July, they should blame those hostile U.S. judges who keep siding with U.S. billionaire hedge fund bosses such as Paul Singer.

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“By making this deposit, Argentina confirms once again its unshakeable commitment to meet its obligations to bondholders, ” the Economy Ministry said in a statement.

But it won’t dance to anyone else’s tango music but its own, apparently.

Reuters suggested it was still not clear which bondholders received their payments before the end of the September deadline, and whether the U.S. court will consider their taking those payment a violation of its ruling against Argentina.

What happens if the bondholders didn’t get their money by yesterday? There will be a 30-day grace period, and then Argentina would be in default, not for the first time in its history.

The Argentine central bank deposited the payments on its foreign law Par bonds with Nacion Fideicomisos, which was picked after the Argentine government severed its ties with the original trustee, Bank of New York Mellon Corp, to evade the U.S. court rulings, Reuters reported.

The July default resulted from U.S. District Judge Thomas Griesa disallowing a June payment, blocking Argentina from servicing its restructured debt before it paid everything it owed those U.S. hedge funds that refused the Argentine government’s offer of bond swaps in 2005 and 2010. We’re looking at you, Mr. Singer…

After that harrowing experience, the Argentine government enacted a law that permits it to service its debts at home, away from the long arm of Judge Griesa.

Judge Griesa was appropriately pissed on Monday – he held Argentina in contempt and ordered it to stop running in circles around him, it was making him dizzy.

It’s not surprising, but it is telling that a U.S. judge can favor the needs of U.S. fat cats over those of millions of Argentines who, very soon, won’t be able to enjoy the advantages of international credit, such as eating food and driving cars.

That’s, essentially, how Argentine President Cristina Fernandez de Kirchner reacted on Tuesday, she said she was not surprised by the ruling and, said she expected sanctions, too.

Let’s play chicken, Judge, let’s see if the U.S. can lose a South American ally to, say, the Chinese…

“Perhaps they will arrest me next time I go to New York, but let me be clear, I’m going to go anyway, ” President Fernandez de Kirchner said.

They probably won’t arrest her, but those hotel suites – cash only, please…

Joking aside, a default on the Par bond series would mean that creditors will insist on accelerated payment of their bond holdings, which amount to about $30 billion.

Argentina’s GDP in 2013 was $612 billion.



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