Lawyer: 15-year dispute with Argentina near $5B settlement

NEW YORK, N.Y. – A lawyer for large U.S. hedge funds owning Argentine bonds said Wednesday that his clients have nearly settled on a $5 billion deal with Argentina to end a 15-year-old dispute that has interfered with the South American nation’s efforts to end a debt crisis and gain a healthier footing in the world’s financial markets.

Attorney Matthew McGill revealed the status of the negotiations as he told the 2nd U.S. Circuit Court of Appeals in Manhattan that he fears the courts will spoil the deal by too quickly removing orders protecting the bondholders.

“If we have just a little time, we can finish the deals,” he said. “It is so close and it would be such a tragedy if it all vaporized.”

McGill asked the 2nd Circuit to keep in place appeals that prevent lower-court orders from being lifted. But the appeals court dismissed the cases anyway, though with conditions that will ensure parties can appeal any lower-court ruling that results.

McGill said the economic terms of a $5 billion settlement on behalf of NML Capital Ltd. and Aurelius Capital Management were reached Feb. 18. He said the deal, held up by payment mechanics, was closer to Argentina’s offer of a discount of about 30 per cent from the value of the bonds than to a 100 per cent payout.

A settlement would close the bulk of claims against Argentina by investors who went to court rather than trade about $10 billion in bonds for steeply discounted bonds offered in swaps after Argentina defaulted on about $100 billion in bonds in 2001.

Argentina had refused to settle the cases after 93 per cent of its creditors accepted the exchange offers and held new bonds worth between 25 per cent and 29 per cent of their original value.

After President Mauricio Macri took office Dec. 10, Argentina announced it was open to negotiations and began them in January in New York with the help of a court-appointed mediator, Daniel Pollack.

Pollack has announced deals totalling more than $1.5 billion with various creditors after Argentina said it expected to pay about $6.5 billion to settle the claims.

In a statement Wednesday, Pollack expressed displeasure with McGill’s revelations, saying it “violated the confidentiality of the discussions between the parties, which is an inviolable principle of all negotiations through me as special master.”