U.S. court rejects Argentina's request to block payments in bond dispute

NEW YORK Wed Nov 21, 2012 9:59pm EST

NEW YORK (Reuters) - A New York federal judge on Wednesday rejected a request by Argentina to maintain his previous order halting payment on defaulted sovereign bonds to holdout investors until lingering questions are settled in a higher court's appeals process.

The ruling was made by U.S. District Judge Thomas Griesa, who noted that high-ranking officials in Argentina had said the country would not pay certain bondholders.

"It is the view of the District Court that these threats of defiance cannot go unheeded, and that action is called for," he wrote.

Griesa directed Argentina to make the first payments into an escrow account for the holdout bondholders on December 15 when the country was scheduled to pay out $3 billion in interest to bondholders who participated in two previous debt restructurings.

Argentina defaulted in 2002.

(Reporting by Andrew Longstreth and Nate Raymond; Editing by Jacqueline Wong)

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