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Argentina stocks fall again despite Fernandez pledge IMF in warning over Argentina ruling at US Supreme Court
(about 2 hours later)
Argentina stocks fell for a second day as investors ran scared after Monday's US Supreme Court ruling over the country's long battle with bondholders. The International Monetary Fund (IMF) has warned that Argentina's legal defeat in its fight against hedge fund investors may have wider implications.
After the main market closed 10% down on Monday, shares opened 2.5% lower on Tuesday. On Monday, a US Supreme Court ruling sided with bondholders demanding Argentina pay them $1.3bn (£766m).
This was despite President Cristina Fernandez rejecting as "extortion" the court's ruling to side with bondholders trying to recover money from Argentina. It sent the country's stock market tumbling, while President Cristina Fernandez de Kirchner said Argentina would not bow to "extortion".
She urged her countrymen to "remain tranquil" in the days ahead. The IMF said it was concerned about "broader systemic implications".
Argentina's Economy Minister Axel Kicillof was due to hold a press conference later on Tuesday to explain the Supreme Court's decision and how Argentina's government will proceed. The Supreme Court rejected Argentina's appeal against an order to pay the full value of bonds that some hedge funds bought after the country defaulted more than a decade ago.
On Monday, the court rejected Argentina's appeal against an order to pay more than $1.3bn to hedge funds that hold some of the country's bonds, bought after it defaulted more than a decade ago. 'Hold-outs'
Then, bondholders won the right to use US courts to force Argentina to reveal where it owns assets around the world. The court's decision means that bondholders should find it easier to collect their debts. Also, the bondholders won the right to use the US courts to force Argentina to reveal where it owns assets around the world. The court's decision means that bondholders should find it easier to collect their debts.
Argentina has agreed a restructuring with the bulk of investors holding its defaulted debt, but the so-called "hold-outs" have been fighting for 100% of the value.
Some analysts believe it is possible that the Supreme Court's ruling could encourage investors to hold out in other restructurings of sovereign debt.
"The Fund is considering very carefully this decision and, as we have said before, we are concerned about possible broader systemic implications," the IMF said. The Fund is usually closely involved in the financial restructuring of countries in trouble.
On Tuesday, Argentina stocks fell for a second day. After the main market closed 10% down on Monday, shares opened 2.5% lower.
This was despite Mrs Fernandez de Kirchner's rejecting as "extortion" the court's ruling. She urged her countrymen to "remain tranquil" in the days ahead.
'End of the road''End of the road'
But President Cristina Fernandez de Kirchner went on national television to say her country couldn't afford to honour the ruling. She went on national television to say her country could not afford to honour the ruling.
She said her government was willing to discuss the issue further, but added: "What I cannot do as president is submit the country to such extortion."She said her government was willing to discuss the issue further, but added: "What I cannot do as president is submit the country to such extortion."
However, Anna Gelpern, an expert in sovereign finance at the US-based Georgetown Law School said: "This realistically is the end of the road for Argentina's decade-long fight."However, Anna Gelpern, an expert in sovereign finance at the US-based Georgetown Law School said: "This realistically is the end of the road for Argentina's decade-long fight."
The South American country defaulted in 2001 following its economic crisis, and has been in a legal battle with bondholders led by hedge funds NML and Aurelius Capital Management.The South American country defaulted in 2001 following its economic crisis, and has been in a legal battle with bondholders led by hedge funds NML and Aurelius Capital Management.
Argentina argues that the funds bought most of the debt at a deep discount after the default, and has since tried to impede the country's efforts to restructure.Argentina argues that the funds bought most of the debt at a deep discount after the default, and has since tried to impede the country's efforts to restructure.
Investors holding more than 92% of the defaulted debt agreed in 2005 and 2010 to write off two-thirds of their pre-crisis value, providing Argentina with time to re-build its economy.Investors holding more than 92% of the defaulted debt agreed in 2005 and 2010 to write off two-thirds of their pre-crisis value, providing Argentina with time to re-build its economy.
But the hedge funds owning the remaining 8% held out against the restructuring.But the hedge funds owning the remaining 8% held out against the restructuring.