President Cristina Fernandez de Kirchner
Argentinian President Cristina Fernandez de Kirchner. Reuters

Argentina's deputy president, Amado Boudou, says his nation will find a way to pay its exchange creditors regardless of the outcome of what a U.S. District Court in New York rules in the coming days.

President Cristina Fernandez de Kirchner also suggested selling the presidential palace in Buenos Aires to keep repaying creditors who agreed to restructure the country's debts, according to Reuters.

If Argentina's creditors were to agree to swap into Argentine law bonds, the activities would be outside of the New York court's reach. That option, in principle, may look attractive to creditors who might otherwise find themselves holding defaulted debt again.

The New York court along with two hedge fund litigants are demanding $1.3 billion from Argentina in bond payments to international bondholders. Argentina is due to pay bond coupons this week and again in June; however, de Kirchner's government has only proposed to repay holdout bond investors one-sixth of the money owed them since 2001.

Observers' views contrast dramatically on the issues. In opposing op-eds to the Financial Times, investment firms debated reasons they support or reject Argentina's proposal.

"We need to take into account that holdouts made a voluntary choice not to accept previous offers," Federico Tomasevich of Puente Bank told Financial Times in anticipation of the court decision. "A ruling that affected payments to exchange bondholders would be tremendously unfair."

However, representatives at Greylock Capital Management rebutted in their own op-ed today.

"After years of stalling, Argentina gave creditors a unilateral, 'take-it-or-leave-it' offer that, despite Argentina's threats and ultimatums, only reached a 76 percent acceptance rate," Hans Humes and Diego Ferro of Greylock Capital Management said in an op-ed to Financial Times. "This was considerably lower than any restructuring where internationally accepted restructuring principles have been followed."

Humes and Ferro insist that Greece negotiated a voluntary tender offer with its creditors and Belize reached a deal with its bondholders and expect Argentina to follow their lead. "In both cases, IIF principles were followed, creditors agreed to take significant haircuts, and there was no discussion of using the recent U.S. court rulings to 'hold out'," Humes and Ferro told the Financial Times. "No other country has ever acted with the obstinacy of Argentina, and the current system for sovereign debt restructurings work."

Argentina's existing creditors will likely reject the proposal if it involves switching to local law bonds, which means Argentina risks a repeat of its legal nightmares.

In 2005 and 2010, about 91 percent of Argentina's bondholders accepted de Kirchner and her government's terms, which included lower repayment at a time when the country restructured its sovereign bonds.

However, in 2012, Argentina defaulted on nearly $100 billion of its sovereign debt during the height of its financial crisis, and the New York court ruled that Argentina must repay equally those boldholders who agreed to restructured amount and those who insisted on full repayment.

Argentina claims that a ruling forcing it to pay creditors who hold defaulted bonds would open it up to more than $43 billion in additional claims that it can't pay and trigger a new default.