If a U.S. court declines to offer Argentina more time to cut a deal with "holdout" investors, Buenos Aires may face its second default in 12 years.

Economy Minister Axel Kicillof scrambled to New York on Tuesday to join last-ditch negotiations, holding the first face-to-face talks with the principals of New York hedge funds who demand full repayment on bonds they bought at a discounted rate after the country defaulted in 2002.

Kicillof on Wednesday said the country offered a group of holdout creditors the same reduced payment terms it has agreed to pay other holders of its restructured bonds, but the holdouts refused.

Without a stay of U.S. District Judge Thomas Griesa's order preventing Argentina from making the July 30 deadline — representing the end of a 30-day grace period — for a coupon payment on exchanged bonds, the country will fall into default for the second time in 12 years.

The hedge funds are owed $1.33 billion, but an equal-treatment clause in an agreement Argentina made with bondholders in 2005 would cost Argentina many billions more. For years, the Argentine government has called the hedge fund creditors "vultures" for picking on the carcass of its record $100 billion default in 2001.

After the U.S. Supreme Court ruled in mid-June that the country must pay billions in repudiated bonds, Argentina’s president, Cristina Fernández de Kirchner, dismissed the ruling as "blackmail" by international "vulture funds."

Latin America's No. 3 economy has for years fought the holdout hedge funds that rejected large writedowns of the debt, but after exhausting legal avenues Argentina faces default if it cannot reach a last-minute deal.

In 2002, when Argentina defaulted on $100 billion in debt, dozens were killed in street protests and the government froze savers' accounts to halt a run on the banks.

Christine Lagarde, the head of the International Monetary Fund, said an Argentine default was unlikely to prompt broader market repercussions given the country's relative isolation from the international financial system.

South American leaders on Tuesday rallied behind Fernández de Kirchner, castigating the holdouts as financial speculators menacing the entire region.

Al Jazeera and wire services