Hedge funds freeze bank accounts in push for Argentina debt deal

BUENOS AIRES, May 7 (Reuters) - Hedge funds suing Argentina over its defaulted debt have had two government bank accounts frozen in a bid to pressure the country to improve the terms offered in its previous bond restructurings, a source familiar with the situation said on Thursday.

The accounts are in Belgium and the freeze was imposed by that country's court system, marking the latest twist in a legal feud going back to Argentina's record-smashing default on about $100 billion in sovereign bonds in 2002.

Argentina restructured most of that debt in 2005 and 2010, giving holders around 30 cents on the dollar, but a group of so called holdout hedge funds have sued in the U.S. courts for 100 cents on the dollar.

The funds are scouring the world for Argentine government assets that may be seized under a U.S. federal court decision favoring their claim.

"The government of Argentina steadfastly refuses to sit down with creditors and negotiate," said a statement from NML Ltd.

NML is an affiliate of hedge fund Elliott Management, the lead fund suing Argentina.

"In the absence of a negotiated settlement, our recourse includes locating and attaching Argentine assets wherever we can find them," the statement said.

A spokesperson for Argentina's economy ministry could not be reached for comment.

The amount of money in the frozen accounts in Belgium was not known.

An Argentine navy ship was temporarily detained in Ghana following a court order sought by NML.

Argentina was forced into default again in July last year when a U.S. judge prohibited the South American grains exporting country from servicing its restructured bonds without striking a deal with the holdout hedge funds.

Investor sentiment has improved since then as the October presidential election approaches and hopes rise that Argentina may do more to tap its vast shale oil and other natural resources in the future. The market last month snapped up a $1.5 billion bond offer from state energy company YPF.

The next government is expected to be more market friendly than that of outgoing leader Cristina Fernandez, whose heavy currency and trade controls have weighed on the economy while inflation remains in the double digits.

(Reporting by Hugh Bronstein; editing by Andrew Hay)