UPDATE 2-Argentine debt talks go down to the wire to avert default
(Adds surge in bond price, fund manager quote)
By Richard Lough
BUENOS AIRES, July 30 (Reuters) - Argentina was in a race against time on Wednesday to avert its second default in 12 years, needing either to cut a deal by the end of the day with holdout investors suing it or to win more time from a U.S. court to reach a settlement.
The Buenos Aires government said further negotiations with the hedge funds awarded $1.33 billion plus interest by a U.S. court would take place on Wednesday, but there was no confirmation from the office of mediator Daniel Pollack.
Argentine Economy Minister Axel Kicillof on Tuesday held the first face-to-face talks with the principals of the funds, who demand full repayment on bonds they bought at a discounted rate after the country last defaulted in 2002.
The government has until the end of Wednesday (0400 GMT on Thursday) to break the deadlock. If it fails, U.S. District Judge Thomas Griesa will prevent Argentina from making a July 30 deadline for a coupon payment on exchanged bonds.
Bank sources said a group of private banks in Argentina was working up a plan to offer up to $250 million as a guarantee to convince lead holdouts of the nation's good faith and convince Griesa to re-establish the stay.
"Clearly, the banks are working on a credit contribution, a fund that could in some way facilitate the re-establishment of a stay," Francisco Ribeiro Mendonca, CFO of Banco Piano, told local radio station Today Radio Del Plata.
Representatives from Banco Piano are among a delegation from Argentina's banking association, known as Adeba, that has travelled to New York to join the talks. Continuación...