UPDATE 2-Argentina, Citigroup face tough questioning in bond appeal

jueves 18 de septiembre de 2014 16:50 GYT
 

(Updates with further details from arguments, background on litigation)

By Nate Raymond and Joseph Ax

NEW YORK, Sept 18 (Reuters) - A U.S. appeals court signaled its displeasure with Argentina on Thursday as Citigroup Inc warned it faces "serious and imminent hazard" if it follows a judge's order not to process an upcoming interest payment due to bondholders.

The bank urged the 2nd U.S. Circuit Court of Appeals in New York to reverse a judge's ruling blocking payments on $8.4 billion in bonds issued under Argentine law following its 2002 default.

Citigroup faces regulatory and criminal sanctions by Argentina, which defaulted again in July, if it cannot process the $5 million payment by Sept. 30, said Karen Wagner, Citigroup's lawyer.

"If we obey, we have a gun to our head, and the gun will probably go off," Wagner said. "I ask this court, what good will that do? It won't change what Argentina does."

But some panel members questioned why they should consider Argentina's position when the country was taking steps, including passing legislation, to avoid complying with orders that it pay $1.33 billion plus interest to creditors suing for full payment on defaulted bonds.

"I'm not sure why we're even listening to this," said Circuit Judge Reena Raggi. "Your client is the person or entity holding the gun to Ms. Wagner's client's head."

Argentina defaulted in July after refusing to honor a court order to pay bondholders led by Elliott Management's NML Capital Ltd and Aurelius Capital Management.   Continuación...