UPDATE 5-Argentina passes new debt bill with eye on next payment

jueves 11 de septiembre de 2014 19:31 GYT
 

(Adds president signing bill)

By Alejandro Lifschitz and Sarah Marsh

BUENOS AIRES, Sept 11 (Reuters) - Argentina's Congress on Thursday passed a new bill designed to enable the government to resume debt payments to bondholders in defiance of a U.S. court ruling which tipped the country back into default.

President Cristina Fernandez's leftist government is in a race against the clock to make a $200 million coupon payment due on Sept. 30 to prevent the default spreading across bond series, which could raise the risk of investors calling for immediate payment on the principal value of their bonds.

But she needs to route the funds through channels beyond the reach of the U.S. judge who ruled that Argentina must settle a legal fight with a group of New York hedge funds over unpaid debt from a massive 2002 default before servicing its performing debt.

After an overnight debate, the legislature's lower house passed the bill under which the government could make payments on an estimated $29 billion in foreign-held bonds either in Argentina or elsewhere out of U.S. jurisdiction.

It also encourages investors to move their Argentine debt from the United States and other foreign jurisdictions to either Argentina or France via an exchange of debt.

Fernandez later on Thursday signed the bill into law, asserting it would enable Argentina to pay all its creditors.

Government allies brushed aside opposition arguments that the Sovereign Payment Law would not get off the ground because it failed to meet legal requirements of the original bond contracts.   Continuación...