Argentina has failed to strike a deal to avert its second default in more than 12 years after talks with hold-out investers ended without settlement.

The so-called “hold-outs” are US hedge funds that bought debt on the cheap and have never agreed to restructuring.

Last June a judge on the US Supreme Court ruled that Argentina was liable to pay the hold-outs the 967 million euros they were demanding and blocked payments to the restructured bond holders unless it also paid the “Vulture funds”.

After the last minute talks appeared to be going nowhere, the court-appointed mediator Daniel Pollack confirmed that a default by Argentina was imminent .

A fresh default is not expected to affect Argentina’s economy as it did more than a decade ago, when dozens were killed in street protests and the authorities froze savers’ accounts to halt a run on the banks.

The consequences of this second default are likely to be a worsening of an economy already in recession and a weakening currency as more Argentines seek to hold dollars putting pressure on foreign reserves.