(Adds comment from Aurelius)
By Nate Raymond
NEW YORK, April 22 (Reuters) - A U.S. judge on Wednesday ruled that hedge funds suing over unpaid debt stemming from Argentina’s 2002 default are entitled to details of a recent bond offering by Buenos Aires.
U.S. District Judge Thomas Griesa in Manhattan said the funds can seek documents from Argentina and banks including Deutsche Bank AG related to Tuesday’s $1.4 billion bond sale to determine if any assets exist in the United States that could satisfy billions of dollars in unpaid judgments.
“That is a legitimate inquiry and a legitimate question,” Griesa said at a court hearing.
The ruling applies to Argentina and banks subscribed to the offering, including Deutsche Bank and Banco Bilbao Vizcaya Argentaria SA.
The hearing came at the urging of NML Capital, an affiliate of billionaire Paul Singer’s hedge fund and the lead creditor suing Argentina for full repayment on the country’s bonds following its $100 billion default in 2002.
Philippe Zimmerman, Deutsche Bank’s lawyer, told Griesa the bank would cooperate, though he criticized NML’s last-minute efforts as “troubling.” A representative for BBVA did not immediately respond to a request for comment.
Argentina defaulted again last July after refusing to honor court orders to pay $1.33 billion plus interest to hedge funds including NML that had spurned the country’s 2005 and 2010 debt restructurings.
Despite the litigation, Argentina moved ahead with a sale of Bonar24 bonds issued under local law on Tuesday that saw strong demand from investors ahead of elections in October.
NML, though, has said that Argentina’s latest bond offering appears to be covered by orders by Griesa requiring that the country not service its restructured debt unless it also paid the hedge funds.
Griesa in March blocked Citigroup Inc from processing interest payments by Argentina on $2.3 billion in dollar-denominated bonds issued under that country’s laws.
Griesa, though, said on Wednesday that he did not have information before him to suggest Argentina had indeed sought to evade his orders.
Jonathan Blackman, Argentina’s lawyer, told the judge nothing in his past orders prevented the offering from going forward, as it was “purely domestic” in nature.
“This is purely an internal transaction,” he said.
The hedge funds’ position appeared to remain constant even after the hearing, with another lead creditor, Aurelius Capital Management, issuing a statement saying it believed the offering was made with the “intent to hinder, delay or defraud” it.
Aurelius warned that it intends to sue some or all participants in the offering and subsequent bond purchasers for fraudulent transfer, “but only if Aurelius ultimately concludes it is responsible to do so.” (Reporting By Nate Raymond; Writing by Daniel Bases and Noeleen Walder; Editing by Bernard Orr and Leslie Adler)