UPDATE 3-Argentina says bond payment must go through despite U.S. ruling
(Adds details of letter by holdout creditor to U.S. judge)
By Sarah Marsh
BUENOS AIRES, March 13 (Reuters) - Argentina on Friday demanded banks operating in the country process bond interest payments despite a U.S. court ruling that prohibited Citigroup Inc from distributing coupon payments on the country's local law bonds.
The government of leftist President Cristina Fernandez warned Citibank Argentina could lose its operating license if it refused. Wall Street analysts said the U.S. ruling dealt a blow to Argentina's hopes of issuing new debt, even under local law.
Citigroup is one of several international financial institutions caught up in Argentina's lengthy legal feud with bondholders who rejected the country's bond swaps after its 2002 default and who are pressing for full payment.
U.S. District Judge Thomas Griesa ruled on Thursday that letting Citigroup process the payments on so-called dollar-denominated exchange bonds would violate a requirement that Argentina treat bondholders equally.
Argentina said Griesa had no right to interfere with bonds contracted under Argentine law. His orders already caused the country to default on bonds under foreign law last year.
"It's a shameful abuse of jurisdiction," the economy ministry said in a statement.
A Citigroup spokesman said the bank would "pursue all legal measures available to comply both with (Griesa's) decision and Argentine legislation. Citi will appeal the court's decision." Continuación...