BUENOS AIRES May 30 (Reuters) - The province of Buenos Aires has called off plans to tap international capital markets because of prohibitive borrowing costs, sources familiar with the matter said on Friday.
The regional government, which had been readying its first international bond in three years, may have needed to pay an interest rate of up to 13.5 percent to lure buyers into the deal, banks and investors said on Thursday.
The province had been targeting a maximum rate of 12 percent on a 10-year issue and has called off the issuance until borrowing costs drop to more palatable levels.
A spokesman for the province's economy ministry declined to comment on the reports.
Argentina has been virtually shut of out international capital markets since its 2001/02 default on some $100 billion of debt.
A long-running battle with holdout bondholders who rejected Argentina's debt swap offers, which could push Argentina into a new technical default, has kept yields for the country and its provinces in double digit figures.
The U.S. Supreme Court will meet on June 12 to consider whether to hear the case.
"If things go well with the Supreme Court, we could have a rally in Argentine bonds," one of the sources said, noting the province could decide to issue new debt then. (Reporting by Gabriel Burin and Alejandro Lifschitz; Writing by Sarah Marsh; Editing by Steve Orlofsky)