Argentina says proposed debt bill does not break contracts

BUENOS AIRES Wed Aug 20, 2014 10:39am EDT

BUENOS AIRES Aug 20 (Reuters) - Argentina's move to pay its foreign debt locally and allow investors to bring their bondholdings under Argentine law does not break existing debt contracts, Economy Minister Axel Kicillof said on Wednesday.

Kicillof also said Argentina, which insists it is not in default after a U.S. court blocked an interest payment in late June, would continue honouring its debt obligations, including a coupon payment due Sept. 30.

The minister said that to pay the holdout hedge funds demanding 100 cents on the dollar, in accordance with the federal court ruling, would be "financial madness".

"Argentina is going to continue paying its obligations," Kicillof said. "Argentina will preserve its debt restructurings."

(Reporting by Hugh Bronstein and Richard Lough; Editing by Chizu Nomiyama)