(Reuters) - Standard & Poor's on Wednesday cut its credit rating on Argentina's foreign-currency sovereign debt to "selective default" even as talks between officials from Latin America's No. 3 economy and a group of holdout creditors continued in New York. S&P said that in its opinion, Argentina has now failed to make a $539 million payment due on its discount bonds due in 2033. The payment, originally due on June 30, was subject to a 30-day grace period, which expires at the end of Wednesday. The country has until midnight Wednesday (0400 GMT on Thursday) to break the deadlock between itself and holdout hedge funds who were awarded $1.33 billion by a U.S. judge. Argentina has exhausted all legal options to avoid payment. The default rating will remain until Argentina makes a payment on the discount bonds, S&P said. S&P had previously assigned Argentina a long-term rating of "triple-C minus." (Reporting By Dan Burns; Editing by Diane Craft)