A US appeals court has ordered Argentina to pay US$1.47 billion to hedge funds holding its defaulted bonds.

The ruling effectively ended appeals by Buenos Aires against a similar judgement first issued in 2012.

The court held that Argentina must compensate two hedge funds 100% of the value of defaulted Argentine government bonds they hold.

The judge endorsed the decision that Argentina must compensate two hedge funds, NML Capital and Aurelius, for defaulted Argentine government bonds they hold even though the two declined to take part in a restructuring of the debt.

Argentina had not made a convincing case that the court had abused its discretion, the decision said, and had also not proposed a viable alternative way to settle the debts.

The Argentine government has argued that bondholders who took part in the 2005 and 2010 restructuring of nearly $100 billion of defaulted debt, which forced on them huge write downs of the face value of the bonds, would now be able to lay claim as well for 100% compensation.

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The New York federal court said: "Argentina’s lawyers in the case and Argentine officials have publicly and repeatedly announced their intention to defy any rulings of this court and the district court with which they disagree."

The court said Buenos Aires had requested the US Supreme Court to weigh in on the case, it would hold off on enforcing the decision to force Buenos Aires to repay the debts.

Argentina has argued that this move could overwhelm the country’s finances and lead to a fresh default. The case has implications for the massive global market for sovereign debt and would not impact other restructurings.

The court said that its judgement did not open the way for restructured-bond holders to insist on equal payment to those who stayed out of restructurings.

"We believe that it is equitable for one creditor to receive what it bargained for, and is therefore entitled to, even if other creditors, when receiving what they bargained for, do not receive the same thing," the court said.

"The reason is obvious: the first creditor is differently situated from other creditors in terms of what is currently due to it under its contract. Cases like this one are unlikely to occur in the future because Argentina has been a uniquely recalcitrant debtor," it added.

Also the court said newer bond deals almost all include collective action clauses, which permit a super-majority of bondholders to impose a restructuring on potential holdouts.