A consortium of Argentine banks is reported to be offering to buy out the country's debt held by holdout investors suing Argentina.
The development came to light as negotiations got underway to hammer out an eleventh-hour deal aimed at averting a default.
Reuters is quoting a senior banking executive familiar with the offer.
The executive said there had not yet been any discussions with the New York hedge funds leading the litigation and that the offer would require them to take a haircut.
Argentina faces a race against time to avert its second default in 12 years, needing either to cut a deal by the end of the day with investors suing it or to win more time from a US court to reach a settlement.
Argentine Economy Minister Axel Kicillof hurried to New York yesterday to join last-ditch negotiations, holding the first face-to-face talks with the principals of New York hedge funds who demand full repayment on bonds they bought at a discounted rate after the country defaulted in 2002.
Mr Kicillof emerged from talks late last night, saying only that they would resume today, but mediator Daniel Pollack said issues dividing the parties "remain unresolved" and that the two sides had not decided whether to meet again.
Argentina has until 4am Thursday morning, Irish time to break the deadlock.
If it fails, US District Judge Thomas Griesa will prevent Argentina from making a 30 July deadline for a coupon payment on exchanged bonds.
Argentina's key dollar bond due 2033 rose sharply today, and its debt insurance costs fell as investors took some cheer from the meeting.
The hedge funds are owed $1.33bn plus accrued interest, but an equal treatment clause in an agreement Argentina made with bondholders in 2005 would cost the nation many billions more.
Latin America's number three economy has for years fought the hedge funds that rejected large write-downs, but after exhausting legal avenues, it faces default if it cannot reach a last-minute deal.