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US court demands info on new Argentina bond issue

Bilboard placed along a street in Buenos Aires showing a poster from the government-related movement San Martin supporting the Argentine government in its dispute with the so-called "holdout" hedge funds, on July 29, 2014

The New York judge in charge of Argentina's debt dispute with two large hedge funds demanded information Thursday on a new $2 billion bond issue by the country.

New York federal district court judge Thomas Griesa told Deutsche Bank and JPMorgan Chase, reported to be assisting in the bond sale, to immediately provide information on the bonds to NML Capital, one of the two hedge funds.

Bloomberg News reported earlier that the country, currently in default on some of its international debt, is seeking to raise funds to pay $6.3 billion it owes creditors in October.

The bonds are being marketed privately, and could be issued under Argentina local law, rather than US or European law like most of the country's foreign debt.

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That move would ostensibly allow Argentina to make payments on the new debt despite Griesa's order from two years ago that the country cannot service any of its foreign debt without first paying $1.3 billion in principal plus accrued interest and fees the hedge funds have demanded.

The two hedge funds refused to join restructuring of the nearly $100 billion in debt that Argentina defaulted on in 2001 -- in which most bondholders accepted losses of up to 70 cents on the dollar -- and have held out for full payment on the bonds.

Argentina has refused to pay, branding the two funds "vultures" for having scooped up its defaulted bonds for pennies on the dollar with the intention of earning hundreds of millions of dollars in profits by taking the country to court.

The case has raised global issues about the power and rights of bondholders who join or refuse to join sovereign debt restructurings, often seen as necessary to bring countries back to financial health.