The New York Court of Appeals held that, under the terms of bond documents requiring biannual interest payments "until the principal…is paid," Argentina was contractually obligated to make biannual interest payments to bondholders even after the bonds' scheduled maturity date in 2005 and after certain bondholders accelerated the maturity date following Argentina's default in 2001. Because the bond documents required interest payments "until the principal…is paid," Argentina's obligation continued until it repaid the principal in full or until its obligation was "merged" into a final judgment.
In 1998, Argentina issued $200 million worth of Floating Rate Accrual Notes scheduled to mature in April 2005. Under the terms of the bond documents, Argentina assumed the obligation to pay bondholders interest-only payments twice a year until the principal was paid at a floating interest rate that would rise or fall based on changes in Argentina's financial condition. Bondholders were permitted to accelerate the due date of the principal in the event of a default.
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