Argentina in US court fight over bonds payouts

Argentina has submitted its final written arguments in a court showdown with creditors in New York, suggesting the nation's economy would be ruined and a dangerous global precedent set if it lost its appeal.

In briefs filed minutes before the appellate court's deadline, on Saturday, the South American government refused to make concessions to creditors it called "vulture funds". The briefs also said federal Judge Thomas Griesa's plan to force Argentina to pay US$1.3 billion to the plaintiffs could trigger other claims totalling more than US$43 billion.

Argentina's government argued that the judge's remedy would make it impossible for other nations to negotiate better terms when their economies deteriorated sharply to allow them to maintain foreign debt payments. If upheld, the ruling would give all the power in such talks to a small minority of bond-holders who refused to accept anything less than full payment for their investment.

The bond-holders, led by NML Capital, an investment fund controlled by United States billionaire Paul Singer, want to be paid the full originally promised value, plus interest, for defaulted bonds on which Argentina has not made payments on since its 2001 debt crisis. They have argued that with more than US$43 billion in foreign reserves, the government was more than capable of paying them.

Instead, the government has offered the same terms that 92 per cent of other bond-holders accepted years ago, saying it could issue the plaintiffs new bonds that were worth far less than the 1990s debt, reflecting Argentina's post-crisis economy.

Argentina's peso, for instance, lost most of its value after its historic debt default, and has never fully recovered, despite years of growth that the debt restructurings had fostered.

Both sides have 15 minutes for oral arguments on February 27 before the full appellate court in New York. A three-judge panel of the same court sided against Argentina, which is determined to take its case all the way to the US Supreme Court if necessary.