Argentina on Friday repaid the so-called “vulture funds” that sued it over billions of dollars in defaulted bonds, ending a 15-year saga and restoring its good standing on international credit markets.
The payment ends a decade-long battle in the US federal courts and should enable the South American nation to finally lay to rest the ghost of its 2001 default, the largest in history at the time — nearly US$100 billion.
“The republic has made full payment in accordance with the specific terms of each such agreement” with holdout creditors who had successfully sued the country, Argentina’s lawyer said in a statement to the court.
US District Judge Thomas Griesa then gave his official blessing, lifting an injunction he had slapped on the country that effectively blocked its deals to restructure its debt until it settled with the holdouts.
Argentina handed over US$6.2 billion to settle disputes with 20 creditors. It is due to pay another US$3.1 billion in the coming days to settle lingering claims.
The move comes after Buenos Aires raised US$16.5 billion in a momentous return to international credit markets, with most of the proceeds going toward repaying the holdouts.
“The payments made today to the funds in litigation totaled US$9.3 billion. The total of all payments is estimated to reach US$10.5 billion, accounting for 44 percent of all legal claims,” the Argentine Ministry of Finance said in a statement.
Griesa’s decision also “allows payments owed to bondholders from the 2005 and 2010 debt swaps, and this will be implemented within the next three weeks,” the statement said.
Paying off disgruntled creditors — especially New York hedge funds NML Capital, a unit of multi-billionaire Paul Singer’s Elliott Management and Aurelius Capital Management, which led the lawsuits against the country — will draw the curtain on a long drama that had hurt the Argentine economy.
The payments concluded a delicate legal and financial dance that required creditors to trust that they would be paid by Argentine President Mauricio Macri’s administration, according to settlements negotiated in February.
The creditors were mistrustful as former Argentine president Cristina Kirchner had for years refused to deal with them.
The conflict dates back to Argentina’s devastating 2001 economic crisis, when the collapse of its dollarized economic model forced the country to default on its debt.
Nearly all its creditors eventually agreed to take losses of up to 70 percent on their bonds in a restructuring that was meant to allow the country to get back on its feet.
However, 7 percent of the creditors, the so-called holdouts, refused. NML and Aurelius, which have pioneered the business of buying up cheap defaulted sovereign bonds and suing for full payment, led the campaign to take the country to court.
Griesa ruled in the hedge funds’ favor in 2012. Kirchner appealed the case all the way to the US Supreme Court, but never managed to overturn the New York judge’s ruling.
Even so, Kirchner refused to pay, arguing it was unfair to the majority of creditors and labeling the hedge funds “vultures.”
However, with Argentina stuck in a prolonged economic slowdown, Macri, a business-friendly conservative, pulled off a come-from-behind election win in November last year.
He took office vowing to get the economy back on track, notably by settling the bitter debt dispute.
US Treasury Secretary Jacob Lew heaped praise on Macri after the debt payment, which he called “a testament to the sea change in policy” and “the product of Argentina’s new direction.”
“Argentina is turning a page on a difficult period of its history,” he said in a statement. “I have reiterated our admiration for the speed at which Argentina is moving to create more sustainable and inclusive economic growth, and to reconnect with the global economy and the world community.”
SEEKING CHANGE: A hospital worker said she did not vote in previous elections, but ‘now I can see that maybe my vote can change the system and the country’ Voting closed yesterday across the Solomon Islands in the south Pacific nation’s first general election since the government switched diplomatic allegiance from Taiwan to Beijing and struck a secret security pact that has raised fears of the Chinese navy gaining a foothold in the region. The Solomon Islands’ closer relationship with China and a troubled domestic economy weighed on voters’ minds as they cast their ballots. As many as 420,000 registered voters had their say across 50 national seats. For the first time, the national vote also coincided with elections for eight of the 10 local governments. Esther Maeluma cast her vote in the
Nearly half of China’s major cities are suffering “moderate to severe” levels of subsidence, putting millions of people at risk of flooding, especially as sea levels rise, according to a study of nationwide satellite data released yesterday. The authors of the paper, published by the journal Science, found that 45 percent of China’s urban land was sinking faster than 3mm per year, with 16 percent at more than 10mm per year, driven not only by declining water tables, but also the sheer weight of the built environment. With China’s urban population already in excess of 900 million people, “even a small portion
UNSETTLING IMAGES: The scene took place in front of TV crews covering the Trump trial, with a CNN anchor calling it an ‘emotional and unbelievably disturbing moment’ A man who doused himself in an accelerant and set himself on fire outside the courthouse where former US president Donald Trump is on trial has died, police said yesterday. The New York City Police Department (NYPD) said the man was declared dead by staff at an area hospital. The man was in Collect Pond Park at about 1:30pm on Friday when he took out pamphlets espousing conspiracy theories, tossed them around, then doused himself in an accelerant and set himself on fire, officials and witnesses said. A large number of police officers were nearby when it happened. Some officers and bystanders rushed
HYPOCRISY? The Chinese Ministry of Foreign Affairs yesterday asked whether Biden was talking about China or the US when he used the word ‘xenophobic’ US President Joe Biden on Wednesday called for a hike in steel tariffs on China, accusing Beijing of cheating as he spoke at a campaign event in Pennsylvania. Biden accused China of xenophobia, too, in a speech to union members in Pittsburgh. “They’re not competing, they’re cheating. They’re cheating and we’ve seen the damage here in America,” Biden said. Chinese steel companies “don’t need to worry about making a profit because the Chinese government is subsidizing them so heavily,” he said. Biden said he had called for the US Trade Representative to triple the tariff rates for Chinese steel and aluminum if Beijing was