(by Dr. Goldfinger)

Mendoza province in Argentina received a US district court ruling which says Mendoza will get the extermination of debt exchange term.

The dispute was with the U.S. hedge fund. Now the ruling allows Mendoza to restructure $250 million of bonds due in 2007.

Mendoza’s Aconcagua bonds maturity is asked to be extended by the investors until 2018 from the original 2007. It also asked bondholders to approve to several amendment provisions within one concerning a sovereign immunity clause. But many bondholders say they reject the proposal, which entails recovery values of about 25 cents on the dollar. They also add Argentina’s repayment capacity is higher, so that they appear to be aside of a swap.

Mendoza is said to be affected by the economic crisis in the country (December 2001), so the principal payment cannot be made due on the existing bonds in 2007.