(Adds government official comment on aim of draft bill,
context)
BUENOS AIRES Aug 27 (Reuters) - Argentina's government on
Wednesday ruled out further piecemeal debt negotiations with a
small group of U.S. hedge funds and said the country needed to
strike a deal with all bondholders which have rejected past
restructuring agreements as a single group.
Latin America's No. 3 economy fell into default again last
month after failing to reach an agreement with a group of
holdout funds led by NML Capital Ltd and Aurelius Capital
Management, which are suing for full payment on their bond
holdings.
Other funds which have also rejected bond swaps that
followed the South American country's record default in 2002
lurk on the sidelines and could launch similar lawsuits.
"We have to negotiate with everyone," Economy Minister Axel
Kicillof told a group of congressional committees on Wednesday.
Kicillof's comments poured cold water on already dim hopes
the government might resume talks with NML and Aurelius in early
2015 following the expiration of a legal clause preventing
Argentina from paying holdout investors on better terms than
those obtained by investors which accepted restructuring
agreements in 2005 and 2010.
Investor optimism for a deal suffered a hammer blow last
week when President Cristina Fernandez announced plans to make
debt payments locally and to push bondholders to bring their
debt under Argentine law.
The draft bill, which Congress began debating on Wednesday,
is designed to sidestep a U.S. court ruling banning Argentina
from servicing performing debt until it pays the litigating
funds $1.3 billion plus interest.
"The main aim of the draft bill is to show that Argentina
can pay its debt and wants to pay its debt," Carlos Zannini, a
senior government official, told the hearing.
(Reporting by Alejandro Lifschitz; Writing by Richard Lough;
Editing by Chizu Nomiyama and Jonathan Oatis)