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Hedge fund brands Argentina 'outlaws' over debt payment shift

One of two hedge funds that sued Argentina over defaulted bonds branded the country's leaders "outlaws" Wednesday after Buenos Aires moved to shift its bond payment method.

"Argentina's leaders have literally chosen to be outlaws. They have chronically flouted US court orders, lied to our courts, and proclaimed utter disdain for our courts," Aurelius Capital Management said.

On Wednesday Buenos Aires revealed a plan to shift interest payments to holders of the country's restructured bonds to an Argentine bank processor rather than the Bank of New York Mellon, to shirt the freeze a New York judge put on BNY Mellon's processing those payments.

A ruling by the judge, Thomas Griesa, that Argentina must pay in full the hedge funds for their bonds at the same time it pays interest to restructured bond holders, and the subsequent freeze on the bank, forced the country into default at the end of July.

That came even though Argentina had placed $539 million in a BNY Mellon account to make a scheduled interest payment to creditors.

Argentina has refused to pay the hedge funds, which refused to join the overwhelming majority of creditors in the 2005 and 2010 debt restructurings.

But Griesa has consistently sided with the hedge funds in their US court fight to be paid, and placed the freeze on BNY Mellon in order for force Argentina to comply with his judgements.

Aurelius, which together with NML Capital holds some $1.3 billion worth of bonds which Argentina defaulted on in 2001, said the move Wednesday amounts to a violation of Griesa's order, and said it would further hurt the country's economy.

Argentine leaders "are now 'doubling down' on an illicit and failed approach," it said.

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