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Capital markets

Argentina asks for more time to negotiate with hedge funds

Argentina has said it is willing to negotiate with hedge funds over billions of dollars it owes them in outstanding debt, but the country has set preconditions for talks that it said would take longer than a few days.

Argentina has demanded more time for negotiations with hedge funds as the country crept ever closer to a Monday deadline to repay nearly a billion dollars in old state debts.

Speaking to reporters at the United Nations in New York on Wednesday evening, Argentina's Economy Minister Axel Kicillof said his country is prepared to negotiate but needs more than three days. However he added he would only continue talks with the holdout creditors if current agreements with other bondholders are not affected.

Buenos Aires faces a June 30 deadline to make a $900 million down payment to bondholders who accepted the terms of Argentina's debt restructuring in 2005 and 2010.

"I have no plans to hold meetings before leaving," Kicillof told reporters, referring to talks with the hedge funds, which include Elliott Management's NML Capital LTd and Aurelius Capital Management.

A country edges toward default

Kicillof also warned that a ruling by the US Supreme Court could push Argentina toward a technical default.

A lower court in New York had ruled in favor of the hedge funds, which had sued Argentina for the right to be repaid for outstanding arrears worth $1.5 billion. The case quickly ascended to the highest levels of the American legal system before the Supreme Court declined to hear the case, leaving the New York ruling intact.

The fact that Buenos Aires can no longer appeal the lower court's ruling means it is obligated to pay back all existing bondholders - a daunting prospect considering it only has $28.5 billion in foreign currency reserves.

Argentina has argued that if it pays the hedge funds, it runs the risk of other bondholders demanding $15 billion for the unstructured debt they hold. In addition, owners of the restructured debt could insist on payments totaling $120 billion.

"So probably this is going to push us into a technical default," Kicillof said. "Whichever way you look at it this ruling is forcing Argentina towards the risk of economic crisis."

Negotiations with the hedge funds can only continue if a judge grants a stay that would allow Argentina to pay the holders of its restructured debt without also having to make good on its other commitments.

cjc/sgb (dpa, Reuters)

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