Argentina's New Law To Dodge Debt Default
Argentina has unveiled new legislation aimed at skirting a US ruling, after it defaulted on payments to large hedge funds.
President Cristina Fernandez de Kirchner unveiled a plan that seeks to push bondholders to swap defaulted debt for new notes governed by Argentine law.
Last month the South American country entered default status after a New York court blocked an interest payment of $539m owed to holders of debt issued under US legislation.
That deal was based on a restructure agreement after the country's record 2002 default.
The American ruling, which was slammed by Argentina, could not proceed with that payment until it had also settled on repayment terms with other hedge funds that demanded payment in full.
Ms Fernandez, who previously called the hedge funds "vultures", had insisted Argentina was not in default and called the US court rulings as an attack on Argentine sovereignty.
The new draft legislation is now seen as an attempt to bring Argentina's debt management back under its full control.
She said: "If bondholders decide - in individual or collective form - to ask for a change of the legislation and jurisdiction of their bonds ... the economy ministry is authorised to implement a swap for new public bonds under local legislation."
The new plan thwarts any possible negotiation with the hedge funds which have avoided reaching a default agreement.
A prolonged debt crisis is seen deepening the country's economic recession, weakening the ailing currency and sapping thin foreign currency reserves.
Usually strong on rhetoric, Argentina's president appeared on the verge of tears as she made the announcement on national television.
She said: "Excuse me if I get a little nervous, I usually have more poise.
"However, I really feel that we are living a moment of great injustice in Argentina."