Sat | Sep 23, 2017

Argentina resolves bond debt claims

Published:Wednesday | February 24, 2016 | 2:00 AM
President of Argentina, Mauricio Macri.

Argentina has reached a settlement with several bondholders for US$250 million and €185 million, a court-appointed mediator said on Monday, as the country continues work towards ending a debt crisis that has damaged its ability to manoeuvre financially abroad.

The latest deals boost to more than US$1.5 billion the amount Argentina has committed in deals since President Mauricio Macri took office on December 10.

Court-appointed mediator Daniel Pollack has announced a string of agreements over several weeks after Argentina announced it expected to pay about US$6.5 billion to settle claims of about US$10 billion by bondholders, including United States hedge funds.

The latest settlements involve bondholders, including Lightwater Corp, Old Castle Holdings, VR Capital, Procella Holdings, and Capital Ventures International, Pollack said.

The bondholders refused to swap their bonds at a steep discount when Argentina offered swaps in 2005 and 2010 to ease its financial crisis after it defaulted on US$100 billion in bonds in 2001. They went to court instead, winning judgments.

Meanwhile, 93 per cent of Argentina's creditors accepted the exchange offers, trading their bonds for new ones worth between 25 per cent and 29 per cent of the original value of the bonds.

Pollack announced the latest settlements the day Argentina asked a Manhattan federal appeals court to drop oral arguments scheduled for Wednesday in one of several cases involving bondholders.

Argentina said in court papers filed with the second US Circuit Court of Appeals that it had decided to drop the appeals since Macri took office.

JUDGE TOO EAGER

Lawyer Michael C. Spencer, representing bondholders involved in the cases set to be heard on Wednesday, filed papers late Monday saying a lower-court judge was too eager to vacate court orders protecting bondholders and the appeals court should ensure bondholders remain protected by blocking their dismissal.

Spencer, saying he represented several hundred people and small-fund bondholders with claims of more than US$832 million, complained that Judge Thomas Griesa was rushing to collapse the force of court orders against Argentina.

In a written ruling on Friday, Griesa noted that Macri's government has consistently declared a desire to resolve its disputes with foreign investors and that the new stance has been welcomed in the United States, where Treasury Secretary Jacob Lew has commended it efforts.

Griesa said he recognised Argentina's "earnest efforts to negotiate and its striking change in attitude" since Macri took office and was prepared to automatically lift court orders standing in the way of agreements with bondholders as soon as Argentina repeals all legislative obstacles to settlements and once it satisfies the terms of its deals.

"Allowing the republic to re-enter the capital markets will undoubtedly help stimulate its economy and thus benefit its people," the judge wrote. "It might even encourage other indebted nations to choose compromise over intransigence."

- AP