US judge lifts market ban as Argentina pays most of its debt

A Manhattan judge whose orders have blocked Argentina from operating normally in financial markets vacated his rulings Friday after the republic paid billions of dollars to foreign creditors.

US District Judge Thomas P. Griesa got the "greatest pleasure" lifting his orders after the South American nation lived up to its promises, mediator Daniel Pollack said in a statement.

Pollack, a New York lawyer who was appointed by Griesa last year, negotiated over $8 billion in settlements between Argentina and bondholders since January.

Pollack said the judge does not speak publically except through his court actions but had told him to make public his happiness with the changed circumstances.

"Judge Griesa has expressed to me that he is very gratified by this momentous development in the 15-year litigation over which he has presided," Pollack said.

The lifting of the orders came after Argentina notified the judge Friday that it had fulfilled its promises to all bondholders who had reached deals with it by February 29. A majority of the nearly $10 billion owed to creditors had been settled by that date. Pollack said billions of dollars were paid to bondholders Friday.

The long standoff between Argentina and mostly foreign investors, including US hedge funds, occurred after Argentina defaulted in 2001 on $100 billion of debt with bondholders.

Many foreign bondholders went to court rather than trade their bonds for bonds worth between 25 percent and 29 percent of their original value. The less valuable bonds were accepted by 93 percent of Argentina's bondholders, leading some to characterise the US hedge funds as "vultures," including the country's former President Cristina Fernandez.

Griesa issued orders blocking Argentina from paying the bondholders, who accepted the discounted bonds through US financial institutions, unless bondholders who did not trade their bonds were paid as well, effectively crippling the country's ability to maneuver through world financial markets.

Lawyers for bondholders who carry bonds worth less than $2 billion had tried to delay expiration of the orders on the grounds that Argentina would stop negotiating. A federal appeals court rejected the argument recently and Pollack said settlements continue to be made.

Earlier this week, Argentina Economy Minister Alfonso Prat-Gay said Argentina's unusually high inflation rate is expected to be helped by the payments to bondholders and Argentina's successful return to global credit markets, where it received robust demand for a $16.5 billion bond offering announced Tuesday.