Thursday, March 26, 2015
Euroclear, Clearstream halt trading bridge on Argentine bonds
Clearing houses Euroclear and Clearstream have closed trading bridges on some US$9.4 billion of Argentine bonds issued under local law.
The action will prevent Euroclear customers from settling their trades with Clearstream clients and vice versa, but will not affect trading between customers belonging to the same clearing company, the same source said.
"Any instructions to receive or deliver the aforementioned securities from/to a Clearstream Banking Luxembourg customer will be rejected with immediate effect," Euroclear said in a note to clients.
The note came in response to a similar action taken by Clearstream on March 25 after US district judge Thomas Griesa allowed Citigroup's local branch to make payments on such bonds but prevented other intermediaries from doing so.
The decision was part of Argentina's decade long court battle with holdout investors seeking some US$1.33 billion plus interest from the South American country.
Earlier this month, the US judge presiding over the case said the notes are covered by an earlier injunction that prevents Argentina from servicing its restructured bonds unless it also makes holdout creditors whole.
The closing of the trading bridge came as a surprise to several market participants, who said trading in the securities will now become more complex.
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