RPT-Puerto Rico seeks dismissal of U.S. bond funds' lawsuit

Mon Jul 21, 2014 4:48pm EDT

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July 21 (Reuters) - The U.S. commonwealth of Puerto Rico asked a federal court to dismiss as premature a lawsuit filed by U.S. mutual funds that sought to strike down a recently enacted Puerto Rican law that the funds said posed a threat to American investors.

The law, known as Public Corporation Debt Enforcement and Recovery Act, allows certain public corporations to modify their debts.

The passage of the law in June spooked the $3.7 trillion U.S. municipal bond market and weighed on prices of bonds issued by Puerto Rico's electric authority, known as PREPA.

Puerto Rico said the lawsuit by bond funds run by OppenheimerFunds and Franklin Templeton was untimely because PREPA had not sought to restructure its debt. (Reporting By Tom Hals in Wilmington, Delaware)

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