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Argentina, creditors agree US$253m more in default settlement: mediator

[NEW YORK] Argentina settled with additional creditors holding defaulted sovereign bonds for US$253 million, Daniel Pollack, the court-appointed mediator in the long-running case, said in a statement on Sunday.

The agreements in principle reached late last week with several groups of creditors bring the aggregate amount of settled claims to approximately US$8 billion, the statement said.

"In my capacity as Special Master, with the responsibility for presiding over the conduct of settlement negotiations, I am extremely gratified that holders of approximately 90 per cent of bonds at issue in the cases in the Southern District of New York have now reached settlements with Argentina," Mr Pollack said in his statement.

The settlements reached on Thursday and Friday are with Fore Research and Management of New York City, for the Honero Fund; 35 pension fund clients of Stone Harbor Investment Partners; and 31 individual bondholders. All of the bondholders agreed to the terms set out by Argentina on Feb 5 that will pay the bondholders 150 per cent of their principal investment.

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The most recent settlement moves Latin America's No. 3 economy closer to ending a 14-year legal battle over its historic default, which blocked it from global credit markets. Argentina has reached settlements well above the original US$6.5 billion pot of money committed by Buenos Aires to end the dispute.

Since the election of President Mauricio Macri in November, Argentina has moved swiftly to settle the debt dispute, mainly with US-based hedge funds that sued in federal court for full payment on sovereign bonds defaulted upon in early 2002.

In the coming week, Argentina makes a historic return to the international capital markets by marketing to investors the bonds it intends to sell. The proceeds will be used to make the payments and settle the festering legal case that has locked it out of the international capital markets and contributed to a distorted economic policy framework.

US District Judge Thomas Griesa imposed injunctions on Argentina in a 2012 ruling barring it from paying creditors who settled previously in 2005 and 2010 for less than 30 cents on the dollar without also making a court-awarded payment to certain holdout creditors.

Last month, Argentina's government overturned legal impediments to paying holdout creditors, thus meeting Judge Griesa's requirements for lifting the injunctions. This was nearly the final step that would allow Latin America's No. 3 economy an unencumbered return to international capital markets.

The injunctions were removed by Griesa on March 2. The issue will be heard before the 2nd US Circuit Court of Appeals on April 13. "If the lifting of the injunction is affirmed, it is the expressed intention of Argentina to carry out a US$12.5 billion capital raise to pay all the settlements it has entered," Mr Pollack said.

The country has until noon New York City time on April 14 to pay US$4.65 billion to the main hedge funds that fought for and won an advantageous settlement after balking at the terms offered in two prior settlements.

Argentina plans to pay off the creditors in cash after issuing up to US$12.5 billion in new bonds.

About US$3 billion more is needed to pay smaller funds that joined the lawsuit over the years.


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