In its case against "holdout creditors," Argentina asked US District Judge Thomas Griesa on Monday to issue a stay on his ruling, without which Buenos Aires would be barred from making payments on its restructured bonds unless it pays holdouts $1.33 billion (977 million euros).

Argentina owes the sum to a number of hedge funds, including Elliott Management and Gramercy Funds Management, which didn't take part in bond restructurings after the South American country had failed to repay about $100 billion of debt in 2002.

Last week, Judge Griesa ruled that Argentina would be legally barred from making a June 30 coupon payment on its restructured bonds without paying the holdouts first.

"We consider it essential that Judge Griesa issue a stay so that the republic of Argentina can continue paying the holders of restructured bonds," Economy Minister Axel Kicillof told reporters.

For more than a decade, Argentina has been locked in a bitter fight in US courts with creditors who refuse to accept a 2005 and 2010 revamp of debt securities, demanding to be repaid in full. On Tuesday, Buenos Aires was running full-page advertisements in newspapers across Europe and the US, claiming that paying what it called the vulture funds was the path to default.

"They purchased bonds in default at obscenely low prices for the sole purpose of engaging in litigation against Argentina and making an enormous profit," the advertisement said.

Deal in the making

If Argentina does not make the June 30 payment, it has a 30-day grace period before falling into technical default on its debt.

But faced with dwindling foreign exchange reserves, a looming recession as well as principal and interest payments to the tune of $6 billion maturing next year, Argentina cannot risk cutting off access to international capital markets.

In spite of the US ruling against Argentina, negotiations have been going on, with a framework for the talks starting to take shape. Judge Griesa has appointed a New York financial trial lawyer as a special master to assist in the negotiations.

uhe/kms (dpa, Reuters)