President Cristina Fernandez on Tuesday unveiled legislation that seeks to push bondholders to swap defaulted debt for new notes governed by Argentine law, a move aimed at skirting a U.S. ruling that prevented her government from paying its creditors, Reuters reported yesterday. Argentina slid into default last month after a New York court blocked an interest payment of $539 million owed to holders of debt issued under U.S. legislation that was restructured after the country's record 2002 default. The judge said Argentina could not proceed with that payment until it had also settled on repayment terms with a group of hedge funds that had rejected the restructuring deal and are demanding full payment. Fernandez has argued Argentina is not in default and has consistently labeled the adverse U.S. court rulings an attack on Argentine sovereignty. The draft bill appeared to be an attempt to bring Argentina's debt management back under its full control. A new bond swap carries legal risks, analysts said, and appeared to kill hopes that Argentina might soon reach a deal with the hedge-fund holdouts, enabling it to exit default.
