BUENOS AIRES, March 31 (Reuters) - Argentina will make an interest payment on its restructured debt on Tuesday as planned, an economy ministry spokeswoman said, although payment will almost certainly not reach most bondholders.
If the South American country fails to complete the transfer by the end of Tuesday, it will have a one-month grace period before its sovereign debt default on foreign law exchanged bonds spreads to exchanged debt held under local law.
A U.S. judge has barred Argentina from paying interest on bonds that were restructured after its 2002 default until it settles with a group of U.S. investors who rejected the bond swaps. Argentina tipped back into default in July.
In July, September and December, Argentina processed interest payments in defiance of Judge Thomas Griesa, who ordered financial intermediaries to freeze the transactions on the foreign law bonds but made special exemptions for local law securities. This time around, there is no exemption.
Asked when the payment would be made, a spokeswoman for the economy ministry said: “In the course of today. The payment is being processed normally, as on each previous occasion.”
Belgium-based clearing house Euroclear said it would not process coupon payments on some Argentine local law bonds subject to the U.S. court injunction, Thomson Reuters’ IFR reported, citing an official note to the market.
They included the today’s coupon payment on the dollar-dominated Par bonds due in 2038.
”You will not receive any payment on these bonds until further notice, Euroclear said in the note to clients, referring to five series of Argentine law securities.
Another intermediary, Clearstream, informed the market on Monday that it would not handle payments on the Par bonds either.
Argentina argues it is not in default as it has met its debt obligations by making payment and accuses Griesa of overstepping his bounds.
On Friday, the country’s securities regulator suspended Citibank Argentina from conducting capital market operations after it struck a deal with the hedge funds to help it exit its local custody business. (Reporting by Jorge Otaola and Richard Lough in Buenos Aires and Davide Scigliuzzo in New York for Thomson Reuters IFR; Writing by Richard Lough; Editing by Chizu Nomiyama)