UPDATE 2-US court rules against Argentina over debt fix

* Argentina treated bondholders unequally--court

* Bondholders who did not join swaps deserve payment

* Decision could affect future sovereign restructurings

* Argentina bond prices fall

NEW YORK, Oct 26 (Reuters) - A U.S. appeals court said Argentina improperly discriminated against bondholders who refused to take part in massive debt restructurings in 2005 and 2010 by deciding to pay them later than bondholders who agreed to participate.

Friday's decision by the 2nd U.S. Circuit Court of Appeals in New York stems from Argentina's roughly $100 billion default in 2002 and could make it harder for countries trying to extricate themselves from sovereign debt crises in the future to fend off angry creditors.

The price of Argentine global bonds maturing in 2017 fell more than 13 percent after the decision, declining to $87.50 in the Buenos Aires' over-the-counter market, according to Reuters data.

A unanimous three-judge appeals court panel said that in conducting the restructurings, Argentina violated a provision in the bonds that required it to treat bondholders equally, even if they chose to hold out.

It also said U.S. District Judge Thomas Griesa in Manhattan correctly issued injunctions in February requiring equal treatment for holdouts, including the plaintiffs NML Capital Ltd and the Aurelius Capital Management funds, which owned $1.4 billion of defaulted debt.

Writing for the panel, Circuit Judge Barrington Parker said he had ``little difficulty'' in concluding there was a breach, given the efforts by Argentine officials and legislators to ensure that holders of restructured debt had priority.

Parker added: ``Nothing in the record supports Argentina's blanket assertion that the injunctions will plunge the Republic into a new financial and economic crisis.''

More than 90 percent of Argentina's defaulted debt has been restructured.

Argentine officials and the plaintiffs were not immediately available to comment.

The 2nd Circuit did ask Judge Griesa to clarify how the injunctions' payment formula is intended to work, and how the injunctions apply to third parties such as intermediary banks. It returned the case to his court to address those issues.


In oral arguments in July, a lawyer for Argentina had argued that a ruling against the country could spur more litigation by creditors, and threaten the ability of other financially-strapped countries -- he cited Greece, Ireland, Italy and Spain as examples -- to undergo debt restructurings.

The U.S. Department of Justice also warned that Griesa's ruling could undermine federal efforts to encourage consensual, global efforts to address sovereign debt crises.

That department was not immediately available to comment.

Griesa oversees a wide range of litigation over Argentina's debt default. While he has awarded several billion dollars to holdout creditors, they have been largely unable to collect because of U.S. sovereign immunity laws.

The case is NML Capital Ltd et al v. Argentina, 2nd U.S. Circuit Court of Appeals, No. 12-105.