UPDATE 5-Argentina dealt setback by U.S. judge over Citigroup bond payments

jueves 12 de marzo de 2015 19:33 GYT

(Adds Citigroup statement and planned appeal)

By Jonathan Stempel

NEW YORK, March 12 (Reuters) - A federal judge on Thursday said Citigroup Inc cannot process interest payments by Argentina on some bonds issued under that country's law, a defeat for the cash-strapped nation as it attempts to re-enter international debt markets.

U.S. District Judge Thomas Griesa in Manhattan said letting Citigroup process the payments on so-called dollar-denominated exchange bonds would violate a requirement that Argentina treat bondholders equally.

Griesa's decision upheld his order on July 28 that blocked Citigroup from making the payments on an estimated $2.3 billion of bonds.

"This is a major blow," said Ignacio Labaqui, an analyst for Medley Global Advisors in New York.

Citigroup asked Griesa on Thursday night not to enforce his decision while it appeals, warning of "catastrophic consequences" for its Citibank unit if it fails to process a $3.7 million payment scheduled for March 31.

Karen Wagner, a lawyer for Citigroup, said in a court filing that failure would result in "immediate and irreparable injury" to the bank, "including the possible loss of its valuable Argentine banking license."

Argentina's economy ministry declined immediate comment.   Continuación...