Jan. 20 (Bloomberg) -- Prices on defaulted debt sold by Metrogas SA are rising from their lowest in three years after a U.S. court ruled against the parent company and the government called for a renegotiation of its contract.
Prices on Metrogas’s defaulted dollar bonds maturing in 2014 rose 2.4 cents to 39 cents at 12:08 p.m. local time after reaching their lowest since Jan. 2009 yesterday.
A U.S. federal appeals court on Jan. 17 threw out a $185 million award to London-based BG Group Plc, which claimed that Argentina’s freeze on natural gas prices caused Metrogas’s bankruptcy. BG Group, the U.K.’s third-largest oil and gas producer, initiated arbitration in the U.S. in 2003 over the gas-price freeze, which Argentina imposed following a sovereign debt default in December 2001.
Argentine Planning Minister Julio De Vido applauded the court’s decision and said Jan. 18 that the government called upon shareholders to “definitively” renegotiate the terms of it’s gas distribution license.
The court’s decision “confirms the absolute sovereignty of the Argentine state in the regulation of its public services,” De Vido said.
The U.S. court said that under the Bilateral Investment Treaty between the U.K. and Argentina, which went into effect in 1993, disputes between contracting parties should be settled in the country where the investment was made. Unsettled disputes may be submitted to international arbitration after 18 months from the time the issue was presented to the competent tribunal.
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