* Holdout bondholders denied request for $250 mln security deposit * Appeals court ruling clears hurdle for exchange bondholder payment By Daniel Bases NEW YORK, Dec 4 (Reuters) - A U.S. appeals court on Tuesday refused to order Argentina to post a security deposit as the country seeks to overturn a court ruling that it pay investors $1.33 billion on defaulted bonds. So-called holdout investors have tried to force Argentina to deposit $250 million while the country appeals last month's order by a U.S. judge that it pay the creditors the full value of the bonds left over from a massive 2002 default. Argentina won a reprieve last Wednesday when the U.S. Second Circuit Court of Appeals in New York said Argentina need not deposit the $1.33 billion into the escrow account by Dec. 15 to satisfy the holdout creditors' claims. Holdouts then filed a motion seeking a security deposit be made to show Argentina was acting in good faith with the court. "Appellees request that this Court amend its November 28, 2012 stay order by requiring the Republic of Argentina to post security on or before December 10, 2012. It is hereby ordered that the motion is denied," the 2nd Circuit said in its ruling. The 2nd Circuit has scheduled oral arguments in the case for Feb 27, 2013. The holdouts, including Elliott Management's NML Capital Ltd and the Aurelius Capital Management funds, want full repayment on their defaulted Argentine bonds after spurning debt exchanges in 2005 and 2010 that 93 percent of other bondholders accepted. A spokesman for Elliott declined to comment on the latest ruling from the 2nd Circuit. Prices for Argentina's dollar-denominated bonds issued during the debt swaps rose between 1.5 percent and 3.9 percent on Tuesday in local over-the-counter trade. Bond prices jumped across the board after the appeals court ruling was reported. The cost to protect a $10 million portfolio of Argentine sovereign debt annually for five years fell to $1.7 million per year after the ruling from $1.9 million on Monday, according to data provider Markit. Barring another attempt by holdout investors to win an order requiring a payment, Argentina looks to be in the clear to continue servicing its restructured debt without fear of court intervention. Argentina has called the holdout creditors "vultures" and vowed never to pay them. The latest battle stemming from Argentina's $100 billion sovereign default nearly 11 years ago centers on a 2nd Circuit decision in October that the country violated a bond provision requiring it treat all creditors equally when it paid the exchange bondholders without paying the holdouts. Dec. 15 is a critical day because Argentina is scheduled to pay $3 billion on warrants issued as part of the debt swaps. This had raised fears of another default because if Argentina had refused to pay the holdouts, as was expected, U.S. courts could have disrupted payments to holders of restructured bonds. Argentina next owes money on its restructured debt in March 2013. The case is NML Capital Ltd et al v. Argentina, 2nd U.S. Circuit Court of Appeals, No. 12-105.