Argentina proposes debt swap to avoid US ruling

Argentina last night tried a new legal move in its efforts to avoid paying off US hedge funds that have acquired its debt and which are refusing to take part in a restructuring.

President Cristina Fernandez unveiled domestic legislation that would swap its existing bonds, which covered by US law, for new notes governed by Argentine law.

“If bondholders decide in individual or collective form to ask for a change of the legislation and jurisdiction of their bonds… the economy ministry is authorised to implement a swap for new public bonds under local legislation,” Fernandez said.

She said: “This is an option bondholders have. It’s not an obligation because we can’t impose obligations on them according to our contracts. Our contractual obligation is to always guarantee that they can collect [interest].”