Argentina gets a break on debt

The court set a February 27 date for oral argument in the case, quashing a December 15 deadline set by Judge Thomas Griesa for a $1.3 billion (£810 million) payment that Argentina has refused to make to NML Capital, a predatory investment fund that specialises in suing over unpaid sovereign debt bought for pennies on the dollar.

Judge Griesa had told President Cristina Fernandez's government to pay the money into an escrow account even as it pursued its final appeals.

Ms Fernandez called his ruling "judicial colonialism" and said she wouldn't pay anything to "vulture funds."

She said the ruling would give speculators a death grip on countries that need to restructure debts as they fight their way out of economic crisis.

Judge Griesa had ordered the Bank of New York to redirect Argentina's December 15 payment to its other bondholders, a draconian remedy that threatened to set off a fiscal crisis.

President Fernandez said the judge's remedy was particularly unfair since NML Capital had refused two opportunities to swap the debt for new bonds, which have been reliably paid since 2005.

Even the threat of the December 15 deadline had brought serious consequences.

In the week since the Griesa ruling, the cost of maintaining Argentina's debts soared.

Credit ratings agency Fitch downgraded Argentina's bonds to one notch above default, predicting that the government wouldn't pay.