Argentina stresses commitment to servicing restructured debt

BUENOS AIRES Tue May 27, 2014 4:20pm EDT

BUENOS AIRES May 27 (Reuters) - Argentina's government stressed on Tuesday that it will continue to service restructured debt regardless of the outcome of its legal fight with bondholders who refused to accept its debt-restructuring offers.

The government laid out its position in a statement ahead of filing its latest court papers in the U.S. Supreme Court in the high-profile litigation. The nine justices are set to consider whether to hear Argentina's appeal on June 12.

If the high court declines to hear the case, lower court rulings that order the Argentine government to pay the so-called holdout creditors $1.33 billion would be left intact.

Argentine President Cristina Fernandez has previously said the country would never pay the creditors, regardless of the court rulings. Argentina's refusal to pay could result in U.S. courts enforcing injunctions blocking payment overseas to bondholders who participated in prior restructurings, possibly causing a new default.

The holdout bondholders' legal argument is that when Argentina services its debt on the restructured bonds, it must also pay a proportion of that money to them.

The statement issued by the Argentina embassy in Washington, D.C., said that the government "reaffirms its commitment to servicing its restructured debt."

The government's legal position in the court case "cannot be interpreted as an unwillingness to comply," the statement said.

An embassy spokesman and a spokesman for Argentina in the case did not immediately respond to requests seeking further clarification of the statement.

Since it defaulted on $100 billion of debt in 2001-2002, Argentina has been in a legal battle with bondholders led by hedge funds NML and Aurelius Capital Management, which rejected two debt restructuring offers. NML Capital Ltd is a unit of billionaire Paul Singer's Elliott Management Corp.

Creditors who had held about 93 percent of Argentina's bonds agreed to the 2005 and 2010 debt swaps, accepting between 25 cents and 29 cents on the dollar. (Reporting by Sarah Marsh; Editing by Grant McCool)

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