Argentina default: Negotiations ongoing on deadline day

Billy Ehrenberg
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It's deadline day for Argentina (Source: Getty)

So it has come to this: today is deadline day, and Argentina needs to settle its debts with the "vultures," agree a stay of execution or face the devastation of default.

Zero-hour is midnight tonight New York time and Argentine economy minister Axel Kicill has flown to the US in a lat-ditch attempt to save the South American nation from default.

Kicill met yesterday with bondholders, marking the first time that there have been face-to-face discussions between Argentina and the group of hedge funds to whom it owes $1.33bn.

Although Kicillof has indicated negotiations are ongoing, the risk of default remains very real, and the parties are understood to be some way from any agreement.

The amount might seem paltry, but a legal clause means that Argentina will face many billions more payments if it pays the group. Many bondholders accepted that they had gambled on a failing economy and in 2005 took cuts in the debt they were owed.

One group of hedge funds did not accept this however and should Argentina pay them at the original rate it would be obliged to offer more favourable terms to any bondholders who had accepted cuts.

The official deadline is midnight tonight New York time or 4.00am GMT on Thursday.

Default would be potentially catastrophic for Argentina, with some commentators suggesting it could lead to the wiping out of the South American country's foreign currency reserves.

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