(Adds Fernandez quotes)
By Richard Lough
BUENOS AIRES, July 16 Argentina is running out
of time to broker a debt deal and avoid another painful default,
"holdout" investors suing the country for full repayment on
their bond holdings said on Wednesday.
Latin America's No. 3 economy has just two weeks to cut a
deal with the holdouts, but a government source told Reuters on
Tuesday there would be no face-to-face talks with a
court-appointed mediator this week, raising questions over
Argentina's commitment to reaching an agreement.
The holdouts spurned the terms of Argentina's restructurings
following a $100 billion default in 2002. The country has until
July 30 to reach a deal with the funds or face default.
"Time is running out for Argentina," read a full-page
advertisement in Argentina's El Cronista daily, by a U.S. lobby
group working for the New York-based hedge funds.
"It is time for Argentina to demand that its leaders behave
in a serious and responsible manner to save this country from
Addressing leaders of the so-called emerging BRICS economies
in Brazil, President Cristina Fernandez said Argentina had, and
would continue, to honour its debt obligations to investors who
took part in the 2005 and 2010 debt swaps.
But she reiterated that Argentina could not meet a U.S.
court order demanding full payment to the holdouts because of a
legal clause prohibiting Buenos Aires from offering better terms
than those given to investors who accepted large writedowns.
"It is impossible to fulfil what they want," Fernandez said,
standing firm on the government line.
Argentina says it would face claims from other holdouts and
bondholders worth more than $100 billion if did break the
so-called RUFO clause.
For years Argentina shunned talks with the holdouts, that it
portrayed as "vultures" picking on the bones of its default.
But the government has exhausted its legal options to get
around a 2012 ruling by U.S. District Judge Thomas Griesa that
it pay holdouts $1.33 billion, plus accrued interest.
A shrinking economy and dwindling foreign reserves have
increased pressure on Fernandez to negotiate, though she and her
ministers have kept up their frothy, nationalistic rhetoric.
"We need to put an end to this sort of international looting
of finances, as they are doing today with Argentina," Fernandez
told supporters ahead of addressing the summit.
Griesa ruled Argentina could not service its restructured
debt until it settled with the "holdouts" and blocked a June 30
interest payment, leaving the funds in limbo and triggering a
30-day grace period.
The Bank of New York Mellon has filed a motion seeking
clarity over what it should do with the blocked payment.
Griesa said in New York on Wednesday said he would hear
arguments on July 22 related to the banks and payment agents
caught up in the Argentine sovereign debt case.
The hedge funds involved in the case, led by Elliott
Management Corp and Aurelius Capital Management, say they are
willing to accept bonds as part of a deal.
(Additional reporting by Alejandro Lifschitz; Editing by Dan
Grebler and Sarah Marsh)