Argentina in default as 'vulture fund' talks drag on

Debt rating agency Standard and Poor's has declared Argentina in "selective default", as Buenos Aires remained locked in last-ditch talks with the US hedge funds it has branded "vultures."
It was the second time in 13 years Argentina has been ruled in default, and served as a bad omen for the success of a marathon negotiation underway in New York with the stubborn creditors.
Economy Minister Axel Kicillof was expected to emerge from the talks to give a news conference in New York after the deadline for making a USD 539 million payment on Argentina's restructured debt expired.
Argentina had deposited the sum - for payment to those bond holders who had accepted a write-down in deals reached in 2005 and 2010 - in a bank account when it was due at the end of June.

But a New York judge blocked the bank from forwarding the payment to the restructured creditors unless it also paid two US hedge funds the full value of their bonds, USD 1.3 billion, at the same time.
Argentina and these funds - NML Capital and Aurelius Capital Management - have spent the last two days locked in talks in New York with a US court-appointed mediator to try a set a deal on payments before the expiration of a 30-day grace period.

S&P's designation of "selective default" acknowledges that Argentina is current on payments to some creditors and is probably able to make some payments on the debt it has defaulted.

It also said yesterday it could remove the default label once the country makes the payment on the restructured bonds.
These funds bought Argentine debt cheaply when Buenos Aires was in difficulty, and refused to accept a write-down when Latin America's third-largest economy defaulted in 2001.
Kicillof is now holding last-ditch talks with the US court-appointed mediator tasked with resolving the standoff, lawyer Dan Pollack.
Buenos Aires has insisted the only possible solution is for US District Judge Thomas Griesa to suspend his ruling in favor of the hedge funds.
Kicillof, who flew in from Venezuela to add his weight to the negotiations, vowed after Tuesday's talks to "work at this with every bit of serious attention the issue deserves."

Pollack said there had been a "frank exchange of views and concerns.