Argentina reaches deal to settle eurobond claims

[NEW YORK] Argentina has reached a deal to settle with a group of holders of eurobonds it defaulted on 15 years ago, a US court mediator in its debt battle said Tuesday.

Mediator Daniel Pollack announced that the country reached a deal in principle with the "Brecher Class" of "holdout" creditors, to repay them 100 per cent of the principal and 50 per cent of accrued interest on the bonds they hold.

The Brecher group is the fourth holdout creditor group in two weeks to accept a deal with the new government of President Mauricio Macri to settle their claims.

After previous governments refused for years to compromise with the bondholders, who refused to take part in the country's debt restructuring deals in 2005 and 2010, Mr Macri has sought to clear out the US$9 billion in claims that have blocked the country's access to global capital markets.

Last week his government offered US$6.5 billion to settle those claims, which include the face value of the bonds plus interest.

Argentina defaulted on nearly US$100 billion in debt in 2001, and while about 93 per cent of creditors later accepted sharp cuts in the value of their bonds to be guaranteed repayment and help the country restructure its finances, the holdouts have fought in US courts for years to be paid the full value of their bonds.

In 2012 a New York court decided in favour of the holdouts, ordering the country to repay them in full and blocking it from repaying other creditors before the holdouts are satisfied.

Mr Pollack would not give the size of the claims represented by the Brecher class, named after Henry Brecher, who bought some 54,000 euros (S$84,560) worth of Argentine bonds around the time of the default and sued for repayment in 2006.

But a settlement of the whole class of holdout creditors holding the same bonds as Brecher could run in the tens of millions of euros.

"The exact size of the class will not be known for several weeks," Mr Pollack said.

Still, Argentina's main antagonists in the decade-old debt battle, two New York hedge funds the country has labelled "vultures," have yet to agree to settle their US$1.75 billion in claims.

AFP