Argentina Bond Judge Won’t Rule on Citigroup Request

The U.S. judge overseeing litigation over Argentine debt said he won’t agree to Citigroup Inc.’s request that he declare whether the bank is affected by his order barring payments to holders of restructured debt unless holders of defaulted bonds are also paid.

Citigroup this week asked U.S. District Judge Thomas Griesa in Manhattan for a ruling clarifying decisions in a case against Argentina led by Elliott Management Corp.’s NML Capital. Citigroup’s Citibank unit, which said its Argentina branch is custodian for bonds issued under that country’s laws that are to be paid within Argentina, isn’t a party to the NML suit.

Griesa said in an order today that he can’t respond to Citibank’s request until an appeal in the case is decided.

“What further ruling or action is required from the district court will obviously depend on the holding from the court of appeals,” he said in the order. “No more can be said at this time.”

Griesa issued an order in November requiring Argentina to pay NML and other holders of the defaulted bonds before paying investors who exchanged their bonds for new ones, at a sharp discount, in debt restructurings in 2005 and 2010. The case was argued before the federal appeals court in Manhattan in February. That court may rule at any time.

Citigroup said it was seeking clarification because Griesa’s rulings may expose it to “grave regulatory, civil and possible criminal risk for obeying a court order not recognized as valid in Argentina.”

The case is NML Capital Ltd. v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan).

(Updates with excerpt from ruling in fourth paragraph.)
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