The embargo was carried out on funds deposited in the Federal Reserve of New York due to the default on Brady bonds
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The United States Justice executed a seizure of USD 209 million on Argentine state assets, in the context of a lawsuit over the default of the 2001 Brady Bonds. The measure was ordered by Judge Loretta Preska, after the U.S. Supreme Court rejected Argentina's appeal in January.
The seizure was carried out on funds deposited in the Federal Reserve of New York, corresponding to the collateral of the Brady Bonds. The Attestor Master Value fund took possession of these assets as compensation for the unpaid debt.
Seizure and adverse rulings against Argentina
Preska's ruling responds to a long-standing litigation over securities issued in the 1990s and defaulted in 2001. According to analyst Sebastián Maril, the execution of the seizure occurred after Argentina's failure to overturn the ruling in higher courts.
Attestor is part of a group of eight vulture funds with unpaid favorable rulings for USD 460 million.
With this seizure, the outstanding balance of this litigation is reduced to USD 251 million.
In a similar case last month, bondholders who sued Argentina in London managed to execute USD 325 million in guarantee for the GDP coupon.
Another fund, Bainbridge Fund, attempted to expand the seizure on the Brady Bonds, but the judge only authorized the retention of USD 100 million.
El Gobierno tendrá que pagar 209 millones de dólares por el default del 2001
This new judicial blow further complicates the country's financial situation, which seeks international financing amid an adverse scenario.
What are Brady Bonds?
Brady Bonds were issued in 1992 during the Government of Carlos Menem, as part of a debt restructuring program promoted by the then U.S. Treasury Secretary, Nicholas Brady.
The objective was to allow the collection of claims by commercial banks through the issuance of new bonds guaranteed with U.S. Treasury securities. However, the agreement imposed burdensome conditions for Argentina, including:
Waiver of legal sovereignty, forcing the country to submit to international courts in case of litigation.
Commitment with the IMF and the World Bank to privatize public companies, reform the pension system, and modify labor legislation.
Administrative rationalization in the State to reduce public spending.
El Gobierno tendrá que pagar 209 millones de dólares por el default del 2001
According to debt specialist Alejandro Olmos Gaona, speaking to Infobae, the Brady Plan exemplifies the influence of large financial groups over States, establishing conditions that limit their ability to legally defend themselves in future disputes.
With this new execution, Argentina continues to face the costs of decisions made more than three decades ago, while trying to close open legal fronts abroad.
