Argentina\\\'s Congress passes debt restructuring law

BUENOS AIRES, Sept 11 (Reuters): Argentina's Congress gave final approval on Thursday to a law proposing to restructure the country's debt to skirt a US court ruling that forced it into its second default in 12 years.

The debt restructuring plan aims to enable Argentina to make payments on its foreign-held bonds locally or elsewhere beyond the reaches of the US court. It also encourages investors to move their Argentine debt from the United States or other foreign jurisdictions to either Argentina or France.

The effectiveness of the law is in question, however, given that US District Judge Thomas Griesa in New York has declared it illegal because it violates his order favouring creditors in a dispute over the country's default in 2002.

"We don't expect a significant participation rate, though the government will at least send the signal they want: in their view, they're doing what they can to make the payment," said Alejo Costa, chief strategist at local investment bank Puente.

The lower house of Congress passed the bill by an early-morning vote of 134 to 99 following a marathon debate that started Wednesday afternoon. The law had already been approved last week by the Senate.

Griesa in June barred Argentina from servicing in debt restructured under US law in the wake of its $100 billion default in 2002 until it settled with hedge funds who rejected the terms of its 2005 and 2010 bond swaps and sued for repayment in full.

Argentina's next coupon payment is due on Sept. 30.