November 29, 2012 / 10:16 PM / in 5 years

Argentina debt ruling could set bad precedent - Brazil

* Brazil cenbank chief critical of ruling against Argentina

* Tombini says similar rulings could hurt European countries

BRASILIA, Nov 29 (Reuters) - A U.S. court ruling for Argentina to repay creditors who rejected the restructuring of its defaulted debt could set a bad precedent for other countries, Brazilian central bank chief Alexandre Tombini said on Thursday.

Tombini told a group of visiting foreign journalists that similar rulings could hit European countries that had to restructure their debts amid a spreading financial crisis, the central bank’s press office said.

Last week, U.S. District Judge Thomas Griesa ordered Argentina to deposit a $1.33 billion payment by Dec. 15 for investors who rejected two restructurings of bonds left over from its massive 2002 default.

Argentina got a reprieve on Wednesday when a U.S. appeals court gave the South American country more time to fight the order. The Argentine government has vowed not to repay the so-called holdout creditors and appealed Griesa’s ruling.

Tombini’s comments highlight growing concerns with the power that minority bondholders could have in blocking sovereign debt restructurings at a time of crisis.

Brazil has a long history of debt crises and defaults, along with several other Latin American countries that borrowed too much in the 1960s and 1970s and were not able to repay their debts as their economies slowed.

In a dramatic turn of events, Brazil is now paying record-low interest rates on its foreign debt after a decade of economic stability earned it the trust of global investors.

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