A New York appeals court placed a stay Wednesday on a lower court's order that Argentina must repay $1.3 billion to holders of long-defaulted bonds.
The Second Circuit Court of Appeals granted Buenos Aires' rush request to put a hold on a November 21 ruling, which ordered the country to make good on bonds held by US hedge funds within weeks or fall in default on all its debt.
The court accepted to hear Argentina's appeal, again putting off a reckoning over the debt that fell into arrears 11 years ago.
Argentina defaulted on some $100 billion in debt in 2001, and has since restructured its debt twice.
It insists it should not have to repay the $1.3 billion in bonds held by the hedge funds because they refused to take part in a 2005 restructuring agreed by most of the other bondholders.
"We do not think it is right or legitimate to pay vulture funds," Economy Minister Hernan Lorenzino said last week.
The November 21 ruling by New York judge Thomas Griesa rejected Buenos Aires' position and ordered it to repay the $1.3 billion in full, before or in parallel with any other debt payments the country must make.
With Buenos Aires scheduled to pay out $3 billion on previously restructured debt on December 15, Griesa's order meant it also must pay the $1.3 billion by that time or fall into default on all of its debt.
The stay bought Argentina at least a few more months of breathing room: the appeals court scheduled oral arguments on the case for February 27, 2013.
On Tuesday, bond rater Fitch chopped Argentina's rating by five notches to CC, deep in junk territory, saying it expected Buenos Aires to default in the wake of the November 21 ruling.