Argentina’s international row over its $1.5bn default took another twist on Tuesday after the US bank that has frozen a $539m payment was sued by creditors including George Soros in London.
The billionaire investor, who famously “broke the Bank of England” after shorting the pound, is joined by Knighthead Master Fund, RGY International and Kyle Bass’ Hayman Capital Master Fund in the lawsuit against Bank of New York Mellon.
The lender’s “actions have been designed consistently to protect its own interests without reference to the interests” of the bondholders, they claim.
Following a ruling by District Judge Thomas Griesa, who has jurisdiction over the $1.5bn that Argentina owes bondholders, Bank of New York Mellon is holding on to a $539m payment by Argentina to its creditors. He has ordered Argentina to first pay $1.5bn to settle a dispute with holdout investors stemming from the country’s first default in 2001.
The hedge funds’ lawsuit, which was filed in London’s Chancery Court, argues that Bank of New York Mellon should release the portion of the $539m that relates to euro-denominated bonds, as these are governed by British law and not US law, so are not affected by Mr Griesa’ injuction.