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Argentina deposits debt payment, but court blocks it

Argentina has been denied an extension to repay $1.65 billion in debt to US hedge funds, forcing the country's hand as a deadline to make a payment to its other creditors looms.

Argentina has deposited hundreds of millions of dollars it needs to pay back a majority of its creditors, but a US court blocked the payment.

US District Judge Thomas Griesa in New York ruled earlier in June that Buenos Aires was not entitled to pay back bondholders who had accepted downgraded

terms on restructured debt

without also paying holdout creditors who have demanded 100 cents on the dollar.

The arrears stem from 2002, when Argentina defaulted on $100 billion (73 billion euros) in debt and revalued its currency.

Watch video 02:19

Direct investors suffer in Argentina

The enforcement of the court's order came after Griesa on Thursday denied Argentina's request for an extension to repay $1.65 billion in debt to the holdouts, which include two US-based hedge funds.

With the payment blocked, Argentina stands to miss a Monday deadline for making good on $832 million it owes other creditors, but the country still has a 30-day grace period that it can use to strike a deal with the holdouts before a default is official.

cjc/hg (Reuters, AP)

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