By Sarah Marsh and Daniel Bases
BUENOS AIRES/NEW YORK (Reuters) - Argentina's debt default spread to its Par bonds on Friday after the country failed to complete an interest payment, raising the risk that creditors could demand that its cash-strapped government immediately repay all of its debt.
The country last month deposited a $161 million payment with a newly appointed local trustee to try to circumvent U.S. court orders for it to settle with "holdout" investors suing for full repayment of bonds from a 2002 default before paying debtholders who accepted a restructuring.
Yet Par bondholders faced legal and technical hurdles in collecting the payments, and the 30-day grace period since the coupon was originally due expired at midnight Thursday.
The economy ministry has not said whether any bondholders have come forward to collect.
Argentina had already defaulted in July on its Discount notes, but holders of the Par bonds are more likely to claim the accelerated payment of the principal because they are trading at a steeper discount to their original value.
An acceleration could leave Argentina facing claims of up to $30 billion, more than it holds in foreign reserves.
Sources owning Argentine debt say other creditors have approached them about forming a group to accelerate. The move would require the backing of investors holding at least 25 percent of the nominal amount of any single bond series.
"We were asked in very theoretical terms what our thoughts were on acceleration," said one source. "It was something intermediated by an investment bank. The shop leading the offer did not want to be identified."
Analysts say many investors will be hesitant about the move as it could mean costly litigation with an uncertain outcome. It could also trigger a balance of payments crisis and further damage Argentina's ailing economy, making an eventual payment even more difficult.
UNDER PRESSURE
Those talking of acceleration may simply be sounding out options or putting pressure on Argentina to reach a deal with the holdout funds that rejected restructuring following its 2002 default and are seeking full repayment of their bonds.
Argentine cabinet chief Jorge Capitanich said on Thursday that instead of accelerating, those bondholders who accepted steep writedowns in 2005 and 2010 debt swaps should sue U.S. District Judge Griesa for blocking interest payments.
"The person violating the law is the judge and not Argentina, which is fulfilling its obligations to pay its sovereign debt," he told reporters.
Some creditors fear acceleration would simply prevent a solution to the dispute with the holdouts, which would unblock interest payments.
"We are keeping our options open and not siding with anyone in an acceleration effort," said one investor who requested anonymity. "Our interest is not to be an obstacle to a deal that can settle this all after Jan. 1."
Argentina says it cannot reach a deal with holdouts until the year-end expiry of the so-called RUFO clause preventing it from paying them better terms than those taken by bondholders who accepted the writedowns in 2005 and 2010.
"I have heard from a number of Par holders that they will consider what their next move will be after the expiration of RUFO next year," said a source at a fund holding Argentine debt.
Investors sounding out the option of acceleration have signaled patience with Argentina was growing thin, said Siobhan Morden, head of Latin America strategy at Jefferies in New York.
"But the real risk of acceleration will come next year, after RUFO expires," she added.
(Additional reporting by Davide Scigliuzzo with IFR in New York and Hernan Nessi in Buenos Aires; Editing by Kieran Murray and Lisa Von Ahn)
