WASHINGTON - A federal court in Indiana has blocked a company from obtaining a $120 million termination payment from the Hoosier Energy Rural Electric Cooperative Inc. in connection with a 2002 sell-in/lease-out, or SILO, transaction, which technically defaulted after the rating of guarantor Ambac Assurance Corp. was downgraded in June.

Bond lawyers are closely watching the case to see if the court ultimately finds the contract invalid, which would have implications for derivatives and other contracts in the financial markets.

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