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Argentina officials show up for NY talks aimed at averting a default over bond crisis

Mediator Daniel Pollack arrives for a meeting in New York, Tuesday, July 29, 2014. Argentina's government says it will make another effort to make a deal with U.S. creditors ahead of a looming deadline that risks sending the country into its second default in 13 years. (AP Photo/Seth Wenig)

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Mediator Daniel Pollack arrives for a meeting in New York, Tuesday, July 29, 2014. Argentina's government says it will make another effort to make a deal with U.S. creditors ahead of a looming deadline that risks sending the country into its second default in 13 years. (AP Photo/Seth Wenig)

NEW YORK, N.Y. - Argentina's finance secretary arrived Tuesday for talks aimed at avoiding that country's second default in 13 years, though it was unclear whether meetings with a mediator offered any real chance at a deal.

Finance Secretary Pablo Lopez arrived in late morning with other representatives of the South American nation to meet with a court-appointed mediator, Daniel A. Pollack.

The Argentina group, which included Lopez, Javier Pargament from Argentina's treasury office, and two lawyers, did not speak to reporters who waited outside a midtown Manhattan building.

When he entered the building, Pollack said: "Time is short. We will do the best we can."

U.S. District Judge Thomas P. Griesa last week ordered round-the-clock negotiations to avert a Wednesday default deadline. But talks have been sporadic and have failed to bring representatives of Argentina to the table with lawyers for U.S. hedge funds.

Griesa has twice rejected Argentina's request that he suspend the effect of his orders to give Argentina more time to negotiate a settlement with all bondholders that would keep the nation financially afloat.

The hedge funds are owed about $1.5 billion for unpaid debts. Argentina has so far said it is unable to comply with court orders requiring that the hedge funds be paid if the majority of bondholders who swapped their bonds for lower-valued bonds in the past decade are paid.

President Cristina Fernandez has long refused to negotiate with the U.S. hedge funds, led by New York billionaire Paul Singer's NML Capital Ltd., who spent more than a decade litigating for payment in full rather than agreeing to provide Argentina with debt relief.

Argentina has labeled the U.S. funds "vultures" for picking up bonds on the cheap. The government has said paying the U.S. funds would likely trigger lawsuits from other bondholders demanding payment on similar terms. That, officials say, would cost up to $15 billion.

Late Tuesday, lawyers for a group of London-based bondholders who exchanged their bonds in the last decade said the financial firms that hold the bonds might be willing to drop a clause in their contracts which allows them to match deals reached with other bondholders.

The lawyers said the European bondholders in the past few days had been in touch with other interested bondholders who also would be willing to waive the clause, which expires at the end of this year.

The lawyers said the stance by the bondholders was a "clear signal that the republic may be able to obtain a waiver ... opening up a path to settlement."

At a court hearing last week, attorney Jonathan Blackman told Griesa that the clause was a "huge issue" that made a settlement by the end of the month impossible without some easement of the judge's orders.

He said a settlement would have to involve all the holdout bondholders who are owed more than $20 billion.

In a nod to Argentina's requests, the lawyers for the European bondholders also asked Griesa Tuesday to stay the effect of his orders until a negotiated settlement could be reached.

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