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U.S. orders Argentina to pay $1.47 billion to hedge funds

Staff writer |
A U.S. appeals court ordered Argentina to pay $1.47 billion to hedge funds holding its defaulted bonds. Argentina had not made a convincing case that the court had abused its discretion, the decision said.

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The court endorsed the original decision that Argentina must compensate two hedge funds 100 percent of the value of defaulted Argentine government bonds they hold, even though the two hedge funds declined to take part in a restructuring of the debt.

Argentina had not proposed a viable alternative way to settle the debts, the decision said. The New York federal court also said that Argentina's lawyer and Argentine officials "have publicly and repeatedly announced their intention to defy any rulings of this court and the district court with which they disagree."

The New York federal court added that, given that Buenos Aires had requested the U.S. Supreme Court to weigh in on the case, it would hold off on enforcing the decision to force Buenos Aires to repay the debts. That effectively bought more time for Argentina which has said that the court decision could force it back into default on all its debt.

Argentina has argued that bondholders who took part in the 2005 and 2010 restructuring of nearly $100 billion of defaulted debt, which forced on them huge writedowns of the face value of the bonds, would now be able to lay claim as well for 100 percent compensation. That could overwhelm the country's finances and lead to a fresh default.

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