On March 12, Griesa rejected Citibank's petition that its Argentine branch be allowed to make an interest payment falling due on March 31 on dollar-denominated bonds issued under Argentine law, unless holdout creditors are first paid in full. Griesa had on three previous occasions allowed the bank to make 'one time' interest payments on these instruments after it argued that it could lose its Argentine banking licence.
Griesa will likely seek to block new debt issues in any hard currency, with most international banks falling within New York jurisdiction.
The ruling raises pressure on Argentina to negotiate a settlement with 'vulture' investors, which is unlikely under the present government.
Griesa's ruling will exacerbate concerns of other sovereign issuers about making themselves subject to jurisdiction of US courts.
