Argentina defaults on bond payments

Standard & Poor's declared Argentina in default on its foreign-currency obligations after the government missed a deadline for paying interest on US$13 billion of restructured bonds.

The South American country failed to get the US$539 million payment to bondholders after a judge in the United States ruled that the money could not be distributed unless a group of hedge funds holding defaulted debt also got paid.

Argentina, in default for the second time in 13 years, has about US$200 billion in foreign-currency debt, including US$30 billion of restructured bonds, according to S&P.

Argentina and the hedge funds, led by Elliott Management Corp, failed to reach agreement in talks in New York, according to the court-appointed mediator in the case, Daniel Pollack.

After the talks, Argentine Economy Minister Axel Kicillof described the group of creditors as "vulture funds" and said the country would not sign an accord under "extortion".

"The full consequences of default are not predictable, but they certainly are not positive," Pollack said. "Default is not a mere 'technical' condition, but rather a real and painful event that will hurt real people."