BUENOS AIRES (Reuters) – Argentina offered Friday to pay the bondholders in default that sued in the United States about three-quarters of the 9,000 million dollars who they claim backed by justice, a proposal which has already been accepted by two of the six main groups of creditors.
The Government of South American country seeks to fund compensation to those creditors, known as holdouts – by issuing new debt, according to the text of the proposal to overcome the long conflict that kept the country out of international capital markets.
The funds Montreux Dart Management Partners and accepted the offer, which “provides for the payment in cash proceeds from the issuance of new government bonds to be placed Argentina in the capital markets,” the ministry said Argentine Finance.
In the event that the offer is accepted by all creditors, Argentina must pay 6,500 million. The proposal also needs the approval of the Argentine Congress.
The judicial mediator in the case, Daniel Pollack said Friday in a statement that one of the conditions imposed by Argentina is the suspension of a court order that prevents him from making payments to its bondholders restructured, a measure that pushed the country to a partial default in 2014.
Four of the six holdouts main, led by investment fund Elliott Management and Aurelius Capital Management, have not yet accepted the Argentina proposed. The latter two said they had no comment on the offer.
“I have great hope that with continuous negotiations, the funds may also resolve their differences and reach an agreement in principle with Argentina,” Pollack said in a statement issued from New York, where they have been the negotiations with creditors.
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Two proposals
government of Argentina presented two proposals for holders of defaulted debt.
The first, which applies to holdouts who never joined the lawsuits in the United States, provides funding full payment of the value of their bonds plus 50% extra. It replicates an agreement reached with holders of Italians debt earlier this week.
The second offer applies to all creditors who have sued Argentina in US courts. It proposes a reduction of 30% of total creditor claims. For investors accept the deal in the next two weeks, the lower would be removed.
According to the analyst Alejo Costa consultancy Bridge, both Elliott and Aurelius could negotiate removes around 30% proposed by the Government.
“Argentina are starting from a position to make a good deal. Most expected this kind of proposal,” said Costa. “Now the ball is on their side (of the holdouts ) and I think they will fight with a cut less and will eventually reach a solution.”
The center-right government that took office in December in Argentina has said it is a priority to resolve the long legal battle with creditors who rejected restructuring proposed by the country twice and won a favorable ruling in New York to collect debt without deductions.
Representatives of Argentina have had meetings with Pollack throughout the week, in a bid to end a lawsuit that kept the country isolated from the international credit since 2002, when in the midst of an acute crisis he declared in default by about 100,000 million.
The government of President Mauricio Macri, more akin to the markets that the previous administration, expected soon close a deal to build bridges with investors and re-attract money into the country.
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