Argentina has reached an Agreement in Principle with the four key US hedge funds that could settle the country’s 15-year debt dispute, mediator Daniel Pollack said today.
New York Judge Thomas Griesa
The agreement reached last night would see Argentina pay NML Capital, the so-called vulture fund managed by Paul Singer’s Elliot Management, and several other funds the total sum of US$4.653bn to “settle all claims” in New York and worldwide.
The sum accounts for 75% of the full court judgement granted to the funds, including principal and interest, plus an unspecified payment to settle claims outside of the New York Southern district and cover for certain legal costs incurred by the funds.
In a press statement released earlier today, Pollack said the long-running legal battle was “well on its way to being resolved” though added that the agreement was still conditional.
“The Agreement in Principle is subject to approval by the Congress of Argentina and, specifically, the lifting of the Lock Law and the Sovereign Payment Law, enacted under an earlier Administration and which would bar such settlements,” read the statement.
The repeal of the two laws is one of the key issued to be debated in Congress after the legislative year is inaugurated by President Mauricio Macri on 1st March.
Speaking to press hours after the announcement by Pollack, Finance Minister Alfonso Prat-Gay referred to the legislative hurdle ahead, saying that: “We’ve made it up to hear, now it’s the responsibility of Congress.”
The deal will also collapse if the agreed payment is not settled in full by 14th April, though this date could be extended if all parties agree. Pollack added that if this latest settlement and others recently announced were completed, they would cover 85% of all outstanding ‘holdout’ claims.
The Argentine government is planning to issue a bond to raise the funds to pay the holdouts, with Prat-Gay assuring that Central Bank reserves would not be touched for this matter.
Earlier in February, Judge Thomas Griesa, who has presided over the case, agreed to drop injunctions blocking Argentina from tapping global financial markets if Congress repeals the two relevant laws.
Criticising Prat-Gay and the government’s plans, former economy minister and legislator for the Frente para la Victora Axel Kicillof told Radio 10 that “this is the first time I’ve seen someone celebrate that we are going to get ourselves into crazy debt.”
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