BUENOS AIRES, Argentina (AP) — Argentina deposited a $161 million bond interest payment with a newly appointed local trustee on Tuesday in defiance of a U.S. judge who held it in contempt a day earlier for attempting illegal moves to service its debt.
The Economy Ministry said the coupon payment on its foreign law Par bonds was deposited into two accounts of the state-run Nacion Fideicomisos S.A. The new trustee replaces The Bank of New York Mellon, which was removed by the government. The move aims to prove that Argentina can meet its debt locally and sidestep a U.S. court ruling that recently pushed it into its second default in 13 years.
By making the deposit, "Argentina ratifies once again its unshakeable commitment to meet its obligations to bondholders," the ministry said in a statement. It was unclear whether the creditors would be paid by the end of the day Tuesday, which is the deadline.
Argentina settled most of its debt with creditors after its 2001 default by trading lower-value bonds for defaulted debt. But a group of holdouts refused to accept bond swaps in 2005 and 2010 and continues to seek about $1.5 billion. The government argues that it cannot settle with the holdouts without offering similar terms to the others.
But U.S. District Judge Thomas P. Griesa ruled that Argentina could not pay the other creditors until it settled with the holdouts. That triggered a default when Argentina was prevented from paying some $540 million in interest due by July 30.
Argentina's government fought back by approving a law earlier this month that would let Argentina's government pay bondholders locally to skirt the U.S. financial system, which is bound by the U.S. court order restricting Argentina's repayments. But in a move that he called a rarity, Griesa found Argentina in contempt on Monday for continuing to defy his orders. The judge reserved a decision on sanctions pending further proceedings.