A US federal judge on Thursday denied Argentina's request to freeze his order to pay $1.3 billion to hedge fund bondholders, giving the country only four more days to strike a deal with them.
New York judge Thomas Griesa's rejection of the stay request raised the stakes for Buenos Aires, which has warned that it could be forced to default on its debt if it has to pay the hedge funds on June 30, when it is slated to make a regular payment to holders of its restructured bonds.
Argentina Economy Minister Axel Kicillof said earlier Thursday that the government had transferred $1 billion to a US bank account to service the restructured debt.
But he made no mention of whether Buenos Aires would pay the hedge funds, which in the 2000s refused to participate in a restructuring of the country's bonds after it defaulted on nearly $100 billion in debt.
On June 16, Argentina lost its final appeal to the US Supreme Court against paying what it calls "vulture funds", NML Capital and Aurelius Management, which have demanded full payment on the bonds they hold.
Buenos Aires fought the case, saying the hedge funds lost their right to payment by not joining the majority of creditors in accepting a writedown of their bonds to help the country restructure its finances.
The 10-year-old case has raised issues of fairness and the sustainability of sovereign debt restructurings vulnerable to the actions of holdouts.
In the wake of the Supreme Court ruling, the country opened negotiations under Griesa's oversight. On Wednesday, he appointed a New York lawyer, Daniel Pollack, to preside over the talks.