Argentina has defaulted on its debt - for the second time in 13 years
- after last-minute talks in New York with a group of bond-holders
ended in failure.
So-called "vulture fund" investors were demanding a full pay-out of
$1.3bn (£766m) on bonds they hold.
Argentina has said it cannot afford to do so, and has accused them of
using its debt problems to make a big profit.
A US judge had set a deadline of 04:00 GMT on Thursday for a deal. The
crisis stems from Argentina's 2001 default.
Late on Wednesday evening, Argentina's Economy Minister Axel Kicillof
said the investors had rejected the government's latest offer.
"Unfortunately, no agreement was reached and the Republic of Argentina
will imminently be in default," Daniel Pollack, the court-appointed
mediator in the case, said in a statement on Wednesday evening.
The fresh default is not expected to affect Argentina's economy in the
same way it did in 2001, when dozens were killed in street protests
and the authorities froze savers' accounts to halt a run on the banks.
"The full consequences of default are not predictable, but they
certainly are not positive," Pollack said.
Speaking at a news conference in New York, Kicillof said Argentina
would not do anything illegal.
The investors, also known as "hold-outs", are US hedge funds that
bought debt cheaply after Argentina's economic crisis.
They never agreed to the restructuring accepted by the majority of bond-holders.
President Cristina Fernandez de Kirchner has described as vultures the
minority bond-holders - including Aurelius Capital Management and NML
Capital.
She accuses them of taking advantage of Argentina's debt problems to
make large profits.
Ratings agency Standard Poor's downgraded the country to "default"
earlier on Wednesday, although the price of the bonds did not react.
S noted that it could revise the rating if Argentina were to find some
way to make the payments.
The hedge funds are demanding Argentina make interest payments on debt
which it defaulted on in 2001, even though it was bought at less than
face value.
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