BUENOS AIRES: Argentina is embroiled in a high-stakes legal dispute with "holdout" creditors who shunned debt swaps that the South American country hoped would put its 2002 default to rest.
US courts jolted markets last year by ruling in favor of a group of holdouts that had sued for full repayment on their defaulted bonds after rejecting debt exchanges in 2005 and 2010.
Argentina was ordered to pay the holdouts the full $1.33 billion owed them the next time it serviced restructured debt. Argentina appealed, and a ruling by the 2nd US Circuit Court of Appeals is expected in the coming weeks.
The holdouts in this case are led by Aurelius Capital Management and NML Capital Ltd, a unit of billionaire hedge fund manager Paul Singer's Elliott Management Corp. Argentina characterizes these creditors as "vultures" picking over the bones of the country's devastating 2001-02 financial crisis.
About 93 percent of Argentina's creditors joined the debt swaps, stomaching returns of 25 cents to 29 cents on the dollar.
Investors are watching the court rulings closely to see if Argentina would have to enter into technical default to keep from paying the holdouts. The bonds most directly affected are those governed by New York law.
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