For the second time in 13 years, Argentina has defaulted on its international debt, as a group of so-called “vulture fund” investors demanded a full pay-out of US$1.3 Billion on bonds they hold.  Standard & Poor's has already lowered Argentina’s credit rating to “selective default”.

Argentina attempted to negotiate a restructuring of its debt payments, but some American hedge funds refused to agree to terms.  They demanded full payments from Argentina, which said it could not afford to do so.  US courts refuse to allow Argentina to make payments to the entities which agreed to the restructured schedule without making payments to all.

The vulture investors are US hedge funds that bought debt cheaply after Argentina's economic crisis.  One is run by Paul Singer, an American billionaire and conservative political financier.  President Cristina Fernandez de Kirchner accuses them of taking advantage of Argentina's debt problems to make large profits.

This episode is not expected to be as bad as the crisis surrounding Argentina’s 2001 default.  Back then, authorities were forced to freeze bank accounts to prevent a run on banks, and dozens were killed in street protests.  But it is expected to harm prospects for future international investment.