Monday, February 29, 2016

Argentina, holdout creditors reach $4.6 bln agreement

Argentina and its main holdout creditors have reached a $4.653 billion agreement in principle to settle a 15-year-old sovereign debt default dispute, a deal that could help the country to return to international capital markets and revive its economy.

The deal, agreed to late on Sunday and announced by the New York court-appointed mediator Daniel Pollack on Monday, will see the four largest remaining holdout creditors get paid 75 percent of the amount outstanding on their full judgments, including principal and interest.

"This is a giant step forward in this long-running litigation, but not the final step," Pollack said in his statement.

"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," he said.

Hedge fund Elliott Management, run by Paul Singer, brought numerous lawsuits against Argentina over the course of the dispute, with hearings before US District Judge Thomas Griesa, that were appealed but failed to gain a hearing before the US Supreme Court.

He was a tough but fair negotiator," Pollack said, adding: "A settlement is, by definition, a compromise and, fortunately, both sides to this epic dispute finally saw the need to compromise, and have done so."

The remaining largest holdout investors include Aurelius Capital Management, run by former Elliott alumni Mark Brodsky, as well as Davidson Kempner and Bracebridge Capital.

A spokesperson from Elliot said: “We are pleased to have reached an agreement with Argentina. We are hopeful that the completed negotiations, held under the aegis of Special Master Daniel Pollack, have cleared the way for other plaintiffs to reach satisfactory resolutions as well.”

The holdouts rejected two prior debt restructurings in 2005 and 2010 that paid out roughly 30 cents on the dollar. The investors who accepted those deals, referred to as exchange bondholders, have not been paid principal and interest on their bonds since a second default in the summer of 2014 resulting in part from New York court decisions.

Intense talks in 2014 with the Fernandez administration ended without a deal and leaving in place an injunction by Griesa that no one would get their principal and interest unless all creditors were paid at the same time.

A previously scheduled hearing before Griesa is still expected to take place on Tuesday.

Finance Minister Alfonso Prat Gay and Secretary Luis Caputo are scheduled to hold a press conference today at 6 pm.