Argentina agrees $95 billion final deal with ‘vulture holdouts’

Sunday’s deal was the culmination of a promise made by new President Mauricio Macri when he took office in December to resolve the longstanding dispute. Payment needs to come by April 14, Pollack said, or the whole deal is “terminated”.

 The “holdout funds” successfully sued Argentina’s government in a NY court arguing that their debts deserved equal consideration with those of other creditors. Although it likely won’t happen immediately, it’s expected that Congress will repeal the laws and approve the deal.

The agreement would pay funds managed by Elliott Management, Aurelius Capital, Davidson Kempner and Bracebridge Capital, 75% of their full judgments including principal and interest plus certain legal fees.

The accord represents a victory for newly elected Argentine President Mauricio Macri, who campaigned on a pledge to reach a deal with the holdouts and reverse the economic policies of his predecessor, Cristina Fernandez de Kirchner, who had referred to the investors as “vultures” and promised never to pay them.

“The current administration realized that Argentina can not be shut down from the worldwide markets, so from the beginning they said, ‘We’re going to fix this problem, ‘ and that’s what they’re doing”, said Diego Ferro, co-chief investment officer at Greylock Capital Management, in an interview with NPR.

Argentina’s internationally traded bonds did not react to Pollack’s announcement, according to JPMorgan’s Emerging Markets Bond Index + 11EMJ . Almost all the country’s creditors eventually accepted to write off 70 percent of their bonds in a restructuring that was meant to allow the country to get back on its feet.

I will continue to serve, at the pleasure of Judge Griesa, until all claims are resolved, both with respect to the consummation of this central Agreement in Principle and to facilitate settlement with all other “holdout” Bondholders who wish to resolve their claims with Argentina.

The investors bought the bonds at heavily discounted rates after the country’s economy collapsed in 2002.

A woman in Buenos Aires walks by signs criticizing U.S. Judge Thomas Griesa, who in 2013 ruled against the Argentine government in its dispute against NML Capital. The holdouts pledge not to attempt to interfere with that capital raise.> Technical details for executing the payment have yet to be finalized, Pollack said.

“We want to return Argentina to normality” in the economy, Finance Minister Alfonso Prat-Gay told reporters in Buenos Aires late Monday.

The agreement would open the doors to allow foreign investment into Argentina again. Argentina has reached separate accords with other holdout creditors.