Argentina says to meet debt mediator again on Friday

BUENOS AIRES (Reuters) - Argentine officials will meet again with a mediator appointed by a U.S. court on Friday to try to resolve its legal battle with hedge funds suing for full repayment of defaulted sovereign bonds, the government said on Tuesday.

President Cristina Fernandez's government has until July 30 to reach a deal with the funds in a dispute that has pushed Latin America's No. 3 economy to the brink of its second debt default in 12 years.

In comments to reporters, cabinet chief Jorge Capitanich did not mention whether the "holdout" funds would participate.

Economy Minister Axel Kicillof spent four hours hashing through the case in New York on Monday with the mediator, Daniel Pollack, who was appointed by U.S. District Judge Thomas Griesa to find common ground in the years-long dispute.

"It was agreed to continue this meeting on Friday," Capitanich said. "It has been an intense dialogue."

Kicillof, who has sealed deals with the Paris Club of creditor nations and Spanish oil major Repsol in the last few months in a bid to lure back foreign investors, flew back to Buenos Aires on Tuesday.

"It was a very good meeting," he told local newspaper Ambit Financiero. "We went over all the issues and as far as I'm concerned it was an important advance. We will go back on Friday."

Without a deal this month, Argentina would be blocked by Griesa from making coupon payments to creditors who agreed to restructure bonds that the country defaulted on in 2002.

More than 92 percent of creditors accepted less than 30 cents on the dollar in restructurings worked out in 2005 and 2010. The holdouts shunned the restructurings and sued for full repayment of $1.3 billion plus interest, but they say they are willing to negotiate with the government.

Griesa blocked a June 30 coupon payment that Argentina tried to make on the restructured bonds, triggering the start of a 30-day grace period. With time running out before the end of that period on July 30, the two sides have yet to sit down face to face at the negotiation table.

Argentina says Griesa is biased in favor of the holdouts and that he overstepped his powers by blocking the coupon payment.

The government published a two-page legal notice in the New York Times on Tuesday, saying it "duly deposited the amounts of interest due on the New Debt Securities issued within the framework of the 2005 and 2010 Sovereign Exchange Offers."

It said that Bank of New York Mellon, the trustee bank, is required to distribute those funds to the bondholders in question, calling BONY Mellon?s failure to do so a "violation of its obligations".

(Additional reporting by Jorge Otaola and Richard Lough in Buenos Aires and Daniel Bases in New York; Editing by W Simon, Chizu Nomiyama and Peter Galloway)

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