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Argentine default looms as time runs out for debt deal

Published on Jul 26, 2014 11:20 PM
Argentina's Finance Secretary Pablo Lopez (right) arrives with attorneys Angelina Abonna (left) and Javier Pargament (centre) at the office building of mediator Daniel Pollack on July 25, 2014 in New York as talks continue into Argentina's debt. -- PHOTO: AFP

BUENOS AIRES (REUTERS) - Argentina looks set to default on its debt for the second time in 12 years next Thursday as negotiations with "holdout" investors seemingly go nowhere and neither side shows signs of blinking first, though a last minute deal can't be discounted.

Latin America's No. 3 economy has for years fought the holdout hedge funds which snapped up its junk bonds after its US$100 billion default in 2002 and then refused the restructuring terms, suing for repayment in full.

But time is up. After a slew of legal setbacks for Argentina in US courts, the country has just days to comply with a 2012 ruling by US District Judge Thomas Griesa to pay US$1.33 billion plus interest to the funds it calls "vultures."

If the deadlock persists, Griesa will prevent Argentina from making a July 30 deadline for a coupon payment on exchanged bonds, triggering a new default just as the economy struggles with recession, dwindling reserves and soaring inflation. "The outcome is still uncertain, with just days before a technical default is triggered," said analyst Mauro Roca of Goldman Sachs. "A deal now seems unlikely."

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