Argentina's latest bond swap offer has no end date
President Cristina Fernandez submitted a bill to Congress on Wednesday which puts no end date on a bond swap offer aimed at diminishing the share of "holdout" creditors who have refused to settle with Argentina over its massive default of more than a decade ago.
By leaving the upcoming bond swap open ended, the government seeks to repair its strained relationship with U.S. federal courts that have criticized its management of fallout from the country's default on $100 billion of sovereign debt in 2002.
U.S. judges have complained that Argentina's previous two restructurings in 2005 and 2010 included Lock Laws that offered only limited time windows for holders to exchange their bonds for new paper offering less attractive terms than the original defaulted debt.
Creditors holding 93 percent of the defaulted bonds accepted restructurings in 2005 and 2010 that give them less than 30 cents on the dollar but holdout creditors.
On Friday, Argentina lost an appeal of a U.S. court order requiring it to pay $1.33 billion to holdouts who refused to accept steep discounts on the defaulted debt. The government is appealing the ruling and trying to swap its foreign debt for Argentina bonds beyond the reach of U.S. law.
Argentina has so far avoided a new debt crisis thanks to the restraint of judges who last week surprised some observers with a stay order delaying implementation of their decision pending review by the U.S. Supreme Court.
Under the terms of the bill submitted to Congress, Fernandez asked the legislature to give the green light for a third restructuring of Argentina's defaulted debt, offering holdouts an open-ended opportunity at the terms offered in the 2005 and 2010 bond swaps. Lawmakers allied to the 60-year-old two-term president control Congress and the bill is expected to pass.
The 2005 and 2010 restructuring only offered bondholders a matter of months to swap their bonds.
In a direct plea to the U.S. Supreme Court, Fernandez on Monday urged justices to overturn Friday's ruling by the New York-based 2nd U.S. Circuit Court of Appeals that ordered her government to pay the holdouts. She says to do so would undermine future sovereign debt restructurings.
If Argentina does not get the ruling its wants by the U.S. Supreme Court and refuses to pay off the holdouts in full, the ruling could block payment overseas to the 93 percent of bondholders who accepted restructurings in 2005 and 2010 that give them less than 30 cents on the dollar.
Fernandez insists her government is meeting its obligations and rejected one appeals court judge's description of Argentina as a "uniquely recalcitrant debtor."
(Writing by Hugh Bronstein; Editing by W Simon)