U.S. District Judge Thomas Griesa said on Thursday that notes governed by Argentine law and issued in restructurings should be considered foreign debt, making them subject to a ban on overseas bond payments until the country resolves a decade-long legal dispute with its disgruntled creditors, Bloomberg News reported yesterday. The decision is a blow to investors who had turned to the local debt after the judge’s prohibition first went into effect in June, when the nation’s failure to reach a settlement triggered its second default in 13 years. To Barclays Plc’s economist Sebastian Vargas, the risk now is that Judge Griesa may seek to extend the ban to all local-law notes, including those that weren’t issued in debt swaps. “Lots of people had expected to continue to be paid with a local law bond but what we realized is that, no — the judge can prevent payment,” Vargas said.
