U.S. Supreme Court to Consider Argentina Appeal Sept. 30 -- Update

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(Updates to add background on debt-swap legislation in the fifth paragraph.)

By Ken Parks

BUENOS AIRES--The U.S. Supreme Court will consider Sept. 30 whether to hear the Argentine government's appeal in a case involving creditors that are suing for repayment on defaulted bonds, according to a filing Wednesday on the court's public docket.

Argentina is asking the high court to consider a ruling last October by the U.S. Second Circuit Court of Appeals that would block the South American country from making payments on its current bonds unless it also pays hedge funds that own defaulted Argentine bonds.

The Supreme Court decides at its private conference meetings the cases it will consider in the upcoming months. The justices could announce as early as Oct. 1 whether they will hear or reject Argentina's appeal.

Argentina's more than decade-long legal battle with creditors follows its decision to stop paying about $100 billion in public debt in 2001, which at the time was the largest sovereign default in history. The country later restructured about 93% of its debt by offering investors new bonds in heavily discounted debt exchanges in 2005 and 2010.

Argentina's Congress is expected to approve Wednesday a bill that will allow President Cristina Kirchner to launch a new exchange offer aimed at so-called holdout creditors under roughly the same terms as the previous debt swaps.

Hedge funds led by Aurelius Capital Management and Elliott Management Corp.'s NML Capital Ltd. are suing to collect on more than $1.33 billion in unpaid principal and interest on their defaulted bonds.

On Aug. 23, the Second Circuit Appeals Court upheld its previous ruling that Argentina treat its creditors equally. Implementation of that decision is on hold while Argentina asks the Supreme Court to overturn the appellate court´s October decision.

If the Supreme Court refuses to consider the appeal, or rules against it, Argentina might have to pay the hedge funds or default on its current bonds.

However, the Kirchner administration has yet to exhaust all of its legal options.

Argentina has asked the Second Circuit panel to overturn its own ruling or to convene the full banc of judges to reconsider. It could also ask the Supreme Court to review the appellate court's August ruling.

The case has attracted significant international attention due to the risk it might set a precedent for any future sovereign restructurings.

Write to Ken Parks at ken.parks@wsj.com

http://online.wsj.com/article/BT-CO-20130911-710422.html