MEXICO CITY (Sputnik) – Argentina has for the first time left its 2001 state default behind after reaching a $4.65 billion deal with holdout creditors, Economy Minister Alfonso Prat-Gay said late Monday.
“We will not use central bank reserves, to make it clear,” Prat-Gay said as quoted by the La Nacion daily.
He said the deal to repay NML Capital, Aurelius Capital Management, Elliot Management, Davidson Kempner and Bracebridge Capital hedge funds would resolve the long-standing debt dispute.
Argentine lawmakers are expected to approve the holdout deal next week, where President Mauricio Macri is scheduled to send the draft bill.
Argentina went through three major debt crises in 1982, 1988 and 2001, with the latest default declared the largest in the South American country's history.
Buenos Aires restructured 93 percent of its debt, but the creditors holding the rest 7 percent of the bonds did not accept Argentina’s proposal and filed a lawsuit, demanding full payment. A New York court has earlier ruled that Argentina had to pay $1.33 billion to its 2001 bond holders who did not agree with restructuring deal.
The US court had also blocked the transfer of the sum that Buenos Aires forwarded to cover its restructured debt, forcing the country to start negotiations with the bond creditors who refused the restructuring deal. Argentina attempted to reach an agreement on extension of the payment deadline but no accord was signed after negotiations in New York.
Last summer, US District Judge Thomas Griesa ruled that Argentina must pay $5.4 billion to its bondholders in addition to the $1.33 billion it owed.
