The Senate of Argentina in Buenos Aires on September 3, 2014
Buenos Aires (AFP) - Argentina's lawmakers approved a measure early Thursday that would transfer the payment site for the country's restructured debt obligations from New York to Buenos Aires, as the country grapples with fallout from its 2001 default.
France was also added as an alternative payment source in the vote after a marathon session that began Wednesday. The measure was passed by the Senate passed by a vote of 39 to 27 with two abstentions, and now goes to the Chamber of Deputies.
The measures are backed by President Cristina Kirchner, whose supporters hold majorities in both houses of the Argentine Congress.
The bill related to the debt impasse was the Kirchner administration's latest attempt to circumvent a US court order that has blocked payments to creditors holding restructured Argentine bonds.
Argentina is still dealing with the after-effects of its 2001 default on $100 billion in debt, the largest in history at the time.
Buenos Aires reached deals with most of its creditors to restructure its debt, agreeing to repay them just 70 percent of the face value of the bonds they hold.
But two "holdout" US hedge funds refused to accept a write-down on their Argentine bonds, and the US court ruled in their favor, forcing Argentina into its second default in 13 years. Those funds are owed $1.3 billion.
US District Court Judge Thomas Griesa ordered the Bank of New York Mellon (BoNY), which was acting as the agent receiving Argentina's debt payments, not to transfer any payments until Buenos Aires resolves its dispute with the holdout hedge funds.
Kirchner, furious over what she sees as an affront to Argentina's sovereignty, has revoked the BoNY authorization to act as its agent.
Now Buenos Aires and Paris have been opened up as avenues for paying its creditors and sidestepping the US court order.
Meanwhile, some of Argentina's creditors, including US billionaire George Soros, have sued BoNY for failing to pay them the money they are owed.
Buenos Aires, which entered into default after the grace period on a $539-million interest payment expired on July 30, is scheduled to make the next payment on its restructured debt on September 30.