MOSCOW (Sputnik) – A US court has ruled that before it can pay the majority of its creditors Argentina must pay $5.4 billion to its bondholders in addition to the $1.33 billion that it is already required to pay to a group of hedge funds, the Buenos Aires Herald reports.
The decision was made by US District Judge Thomas Griesa in New York who said that the creditors held bonds that were similar to those held by the hedge funds and thus should be treated in the same way, the newspaper said on Friday.
In 2001, Argentina was acutely feeling the impact of an economic crisis that began in 1998 and lasted until 2002. At the time, the country experienced high unemployment rates and defaulted on its foreign debt.
Most of Argentina's creditors agreed to debt restructuring conducted in 2005 and 2010. Two US hedge funds — Aurelius Capital management and NML Capital –refused to accept the deal, prompting Griesa to freeze Argentina's ability to transfer funds to restructured bondholders until it pays the holdouts in the restructuring, mainly the $1.33 billion in bonds held by Aurelius Capital management and NML Capital.
The ruling forced Argentina into its second default in 13 years.
