Citigroup to return to U.S. court Dec. 2 over Argentine bond payments

jueves 23 de octubre de 2014 09:54 GYT

By Nate Raymond

NEW YORK Oct 23 (Reuters) - A U.S. judge has scheduled a Dec. 2 hearing to weigh arguments over whether Citigroup Inc should be allowed to process an expected interest payment by Argentina on bonds issued under its local laws following its 2002 default.

The hearing before U.S. District Judge Thomas Griesa in Manhattan, set out in an order issued late Wednesday, would come less than a month before a Dec. 31 interest payment by Argentina on the bonds is due.

Citigroup has said it faces regulatory and criminal sanctions by Argentina, which defaulted again in July, if it cannot process the country's interest payments on U.S. dollar-denominated bonds issued under Argentine law.

Argentina defaulted in July after refusing to honor a court order to pay $1.33 billion plus interest to bondholders led by Elliott Management's NML Capital Ltd and Aurelius Capital Management when it paid holders of bonds swapped during the country's 2005 and 2010 debt restructurings.

The hedge funds had spurned Argentina's past restructurings, which resulted in exchanges for about 92 percent of the country's defaulted debt. Investors who accepted Argentina's terms were paid less than 30 cents on the dollar on average.

Griesa, who oversees the litigation, in July blocked Bank of New York Mellon Corp from processing a $539 million interest payment on what the country says is over $28 billion in restructured debt.

The order sent Argentina on a course to default after failing to reach a settlement with the holdouts.

As the litigation continued, Citigroup sought Griesa's guidance on whether it could process interest payments it received from Argentina on bonds issued under its own laws.   Continuación...