BUENOS AIRES, Argentina (AP) — Argentina's Congress approved legislation Thursday to restructure the country's debt and sidestep a U.S. court ruling that recently pushed the government into its second default in 13 years.
After a 16-hour debate, the lower house of Congress voted 134-99 in favor of the bill early Thursday. The measure had already passed the Senate, and President Cristina Fernandez formally enacted it later in the day, calling it a "historic event."
"Argentina wants to pay, can pay and is going to pay all its debts to all bondholders," Fernandez said.
The measure 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.
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 that deal and seeks about $1.5 billion. The government says it could not settle with the holdouts without offering similar terms to the others.
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 $539 million in interest due by July 30, threatening to derail an economy already in recession and struggling with double-digit inflation.
Argentina's next debt deadline is Sept. 30, when the country must pay some $200 million. The government sped up the approval of the law seeking to avoid defaulting on those bonds.
The new measure allows creditors abroad to exchange their bonds for new ones under local legislation, and it encourages investors to move their Argentine debt from the U.S. to Argentina or France through a swap.