Argentina defaults for second time in 13 years as 'vulture talks' fail

Argentina was in default July 31 for the second time in 13 years after the failure of last ditch talks with U.S. hedge funds it has branded "vultures." After hours of meetings in New York, Economy Minister Axel Kicillof emerged to confirm that no deal had been reached.

This left it inevitable that Latin America's third largest economy was unable to meet repayment obligations by the midnight deadline. "Unfortunately, no agreement was reached and the Republic of Argentina will imminently be in default," said Daniel Pollack, the lawyer appointed by a U.S. court to oversee the talks.

Ratings agency Standard and Poor's had already placed Argentina in "selective default" when the talks ended. Argentine press reports suggested an alternative solution - in which a coalition of Argentine private banks buy some of the outstanding debt - was being prepared, but until that comes about the country is technically in default.

Kicillof complained that the creditors, U.S. hedge funds that bought defaulted Argentine debt at knockdown rates and then went to court to demand full payment, had refused to compromise. "They were trying to impose on us something illegal," he declared, confirming that he was heading back to Buenos Aires without a deal.

Kicillof slammed S&P's downgrade, arguing that Argentina could not be regarded as being in default since the money for the repayment was in a U.S. bank account ready to be paid but frozen by U.S. District Judge Thomas Griesa's court order.

"Argentina paid. It has money. It is going to continue to pay. The one who is responsible for this situation is Judge Griesa," he said. "We are going to pay those who hold bonds that have been defaulted on, but on reasonable terms, not on terms that amount to...