March 6, 2014 / 1:41 AM / 4 years ago

RPT-UPDATE 1-U.S. backs Argentina in bank subpoena case over holdout creditors

BUENOS AIRES, March 5 (Reuters) - The U.S. government has backed Argentina in one of its cases against sovereign bond investors who declined to participate in restructurings following the country’s 2002 default, according to a brief that was filed this week.

The U.S. Supreme Court in January agreed to consider a dispute over subpoenas in a case stemming from long-running litigation over Argentina’s obligations to bond investors in the wake of its record-smashing default on $100 billion in obligations 12 years ago.

The U.S. government filed an amicus brief on Monday with the court backing Argentina’s stance in the case.

Ninety-three percent of holders accepted steep reductions in payment terms as part of the 2005 and 2010 restructurings.

The court agreed to hear Argentina’s appeal after an appeals court said a hedge fund could subpoena banks for information about the South American country’s non-U.S. assets.

The hedge fund, NML Capital, a holder of Argentine bonds, wants repayment in full. The repayment issue is the subject of high-profile litigation that could be headed to the U.S. high court in a separate case.

In that separate case, Argentina filed an appeal to the U.S. Supreme Court last month seeking to reverse lower court decisions ordering the country to pay $1.33 billion to hedge fund creditors in a case Argentine officials warn could force it to default anew on its sovereign debt.

The appeal followed a Nov. 18 decision by the 2nd U.S. Circuit Court of Appeals in New York denying Argentina’s petition for a rehearing in a decade-long legal battle with holders of debt from the 2002 default.

The litigation has heightened investor concerns about South America’s second-largest economy, which is still reeling from a 17 percent currency devaluation in January and one of the world’s highest inflation rates, estimated by private analysts at about 30 percent.

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