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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.
31 July 2014
Last updated at 00:10 ET
Mr Kicillof said Argentina offered the holdouts similar terms
Argentina has said it cannot afford to do so, and has accused them of using its debt problems to make a big profit.
A US judge had set a deadline of 04:00 GMT on Thursday for a deal. The crisis stems from Argentina's 2001 default.
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.
Speaking at a news conference in New York, Mr Kicillof said Argentina would not do anything illegal.
Bond reaction The investors, also known as "hold-outs", are US hedge funds that bought debt cheaply after Argentina's economic crisis.
They never agreed to the restructuring accepted by the majority of bond-holders.
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.
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.
Supporters of President Cristina Fernandez de Kirchner protest against hedge funds in Buenos Aires
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 would do what is needed to deal with what he called an unfair situation.
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.
Argentina defaults for second time
Mr Kicillof said Argentina offered the holdouts similar terms
Argentina
has defaulted on its debt - for the second time in 13 years - after
last-minute talks in New York with a group of bond-holders ended in
failure.
So-called "vulture fund" investors were demanding a full pay-out of $1.3bn (£766m) on bonds they hold.Argentina has said it cannot afford to do so, and has accused them of using its debt problems to make a big profit.
A US judge had set a deadline of 04:00 GMT on Thursday for a deal. The crisis stems from Argentina's 2001 default.
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.
Continue reading the main story
When Argentina's Economy Minister flew to New York on Tuesday
for the talks, people took that as a positive sign that the two sides
were now talking.
But Axel Kicillof's lengthy address on Wednesday evening dashed those hopes - Argentina was not going to agree to anything that would compromise the country.
At the heart of this is a feeling that Argentina has been treated badly by the international financial system. Mr Kicillof made the point that the vultures always win and the people lose.
Just before the announcement was made there was a small rally in Buenos Aires' Plaza de Mayo, people handing out leaflets saying that the country wouldn't negotiate.
No doubt those people will be happy with the stand that Argentina has taken, but a default will make life harder. The country is already in recession and inflation is high.
Most people think the issue is too complicated - what they do know is that they want to just get on with their lives, whether the vultures are circling or not.
Analysis
But Axel Kicillof's lengthy address on Wednesday evening dashed those hopes - Argentina was not going to agree to anything that would compromise the country.
At the heart of this is a feeling that Argentina has been treated badly by the international financial system. Mr Kicillof made the point that the vultures always win and the people lose.
Just before the announcement was made there was a small rally in Buenos Aires' Plaza de Mayo, people handing out leaflets saying that the country wouldn't negotiate.
No doubt those people will be happy with the stand that Argentina has taken, but a default will make life harder. The country is already in recession and inflation is high.
Most people think the issue is too complicated - what they do know is that they want to just get on with their lives, whether the vultures are circling or not.
The 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.Speaking at a news conference in New York, Mr Kicillof said Argentina would not do anything illegal.
Bond reaction The investors, also known as "hold-outs", are US hedge funds that bought debt cheaply after Argentina's economic crisis.
They never agreed to the restructuring accepted by the majority of bond-holders.
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.
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.
Supporters of President Cristina Fernandez de Kirchner protest against hedge funds in Buenos Aires
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 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.
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