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Hedge funds fail to clinch Argentina debt deal

A vendor sells T-shirts next to banners depicting US judge Thomas Griesa outside the Luna Park stadium, during a ceremony against the so called 'vulture funds', organized by pro-Kirchner political forces, in Buenos Aires, on August 12, 2014
A vendor sells T-shirts next to banners depicting US judge Thomas Griesa outside the Luna Park stadium, during a ceremony against the so called 'vulture funds', organized by pro-Kirchner political forces, in Buenos Aires, on August 12, 2014

Negotiations have broken down over a possible bank purchase of the $1.3 billion in Argentine bonds owned by holdout funds that would allow the country to exit default.

In addition to "exhaustive efforts" to settle with the South American country, the Aurelius Capital Management hedge fund said it had engaged in talks with private parties to end Argentina's sovereign debt crisis -- its second default in 13 years.

"No proposal we received was remotely acceptable," Aurelius said.

"Argentina's leaders have made a calculated, cynical decision to violate and repudiate court orders and to place the republic in wholesale default."

In order to resolve the situation, a group of banks, including US giants JPMorgan Chase and Citigroup, Britain's HSBC, and Germany's Deutsche Bank, were in talks for several days with the hedge funds to buy up the bonds, sources close to the issue had told AFP.

Argentina went into default after it failed to resolve its dispute with the hedge funds, which refuse to take a write-down that has been accepted by most of the country's other creditors.

US District Judge Thomas Griesa prevented Argentina from making a $539 million payment to the creditors who had accepted the debt restructuring deal unless it also repays the hedge funds in full.

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