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'No deal' in Argentine debt talks Argentine debt talks end in failure
(about 1 hour later)
Argentina's Economy Minister Axel Kicillof says "hold-out" investors have rejected an offer as the debt default deadline looms. Last-minute talks in New York between Argentina and a group of bond-holders to avoid the country defaulting on its debt have ended in failure.
With no agreement in place, Argentina will soon default, said a mediator in the case. So-called "vulture fund" investors are demanding a full pay-out of $1.3bn (£766m) on bonds they hold.
Earlier, the lead lawyers representing Argentina, Jonathan Blackman and Carmine Boccuzzi of Cleary Gottlieb Steen & Hamilton, left the talks. Argentina has said it cannot afford to do so, and has accused them of using its debt problems to make a big profit.
Investors are demanding a full pay-out of $1.3bn (£766m) on bonds they hold. A US judge set a deadline of 04:00 GMT on Thursday for a deal. The crisis stems from Argentina's 2001 default.
A US judge has ruled that they must be paid by Wednesday night if no deal is agreed. Late on Wednesday evening, Argentina's Economy Minister Axel Kicillof said the investors had rejected the government's latest offer.
"Unfortunately, no agreement was reached and the Republic of Argentina will imminently be in default," Daniel Pollack, the court-appointed mediator in the case, said in a statement on Wednesday evening."Unfortunately, no agreement was reached and the Republic of Argentina will imminently be in default," Daniel Pollack, the court-appointed mediator in the case, said in a statement on Wednesday evening.
A fresh default is not expected to affect Argentina's economy as it did more than a decade ago, when dozens were killed in street protests and the authorities froze savers' accounts to halt a run on the banks. A fresh default is not expected to affect Argentina's economy in the same way it did in 2001, when dozens were killed in street protests and the authorities froze savers' accounts to halt a run on the banks.
"The full consequences of default are not predictable, but they certainly are not positive," Mr Pollack said."The full consequences of default are not predictable, but they certainly are not positive," Mr Pollack said.
Speaking at a press conference in New York in his native Spanish, Mr Kicillof said Argentina will not do anything illegal. Speaking at a news conference in New York, Mr Kicillof said Argentina would not do anything illegal.
Bond reactionBond reaction
The "hold-outs" refers to US hedge funds that bought debt relatively cheaply during Argentina's darkest hours and never agreed to restructuring. The investors, also known as "hold-outs", are US hedge funds that bought debt cheaply after Argentina's economic crisis.
President Cristina Fernandez de Kirchner has called them vultures, accusing them of taking advantage of Argentina's debt problems to make a big profit. They never agreed to the restructuring accepted by the majority of bond-holders.
Ratings agency Standard & Poor's (S&P) downgraded the country's rating to default earlier on Wednesday, although the price of the bonds did not react. President Cristina Fernandez de Kirchner has described as vultures the minority bond-holders - including Aurelius Capital Management and NML Capital.
She accuses them of taking advantage of Argentina's debt problems to make large profits.
Ratings agency Standard & Poor's (S&P) downgraded the country to "default" earlier on Wednesday, although the price of the bonds did not react.
S&P noted that it could revise the rating if Argentina were to find some way to make the payments.S&P noted that it could revise the rating if Argentina were to find some way to make the payments.
The hedge funds are demanding Argentina make interest payments on debt which it defaulted on in 2001, even though it was bought at less than face value.The hedge funds are demanding Argentina make interest payments on debt which it defaulted on in 2001, even though it was bought at less than face value.
A US judge has blocked payments to other bondholders who agreed a separate deal with Argentina to manage the debt, till the time an agreement with the hold-outs is reached. The US courts have blocked payments to other bondholders who agreed a separate deal with Argentina, until agreement with the "hold-outs" is reached.
Mr Kicillof said he planned to return to Argentina after the news conference, saying the country will do what is needed to face what he called an unfair situation. Mr Kicillof said he planned to return to Argentina after the news conference, saying the country would do what is needed to deal with what he called an unfair situation.
He re-iterated that Argentina cannot pay the hold-out hedge funds without triggering a clause that would cause it to renegotiate with bondholders who accepted new debt agreements. He reiterated that Argentina could not pay the hedge funds without triggering a clause that would force it to renegotiate with bondholders who accepted new debt agreements.