Last updated: 11:41 / Monday, 8 February 2016
Two months in office

Mauricio Macri is Floating a $6.5 billion Deal to Settle Their 2001 Debt Default

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Mauricio Macri is Floating a $6.5 billion Deal to Settle Their 2001 Debt Default
  • Deal includes incentives to be signed in under two weeks
  • Represents a 27.5% haircut for bond holders
  • It is said Montreux Equity Partners and Dart Management have accepted already

Less than two months after President Mauricio Macri took office and expressed his commitment to a deal, Argentina offered a $6.5 billion cash payment to creditors suing the country over defaulted bonds from 2001. The offer represents a 27.5% discount for creditors who filed claims of about $9 billion.

According to a U.S. court-appointed mediator, two out of six leading bondholders have already accepted the offer, Montreux Equity Partners and Dart Management were the two funds that accepted the proposal, while Elliott Management and Aurelius Capital Management are the two lead creditors.

The payment will be financed through new sovereign debt issuances. If a settlement is reached, Macri's next challenge will be to push it through Argentina's left-leaning Congress, where no party holds a lower house majority.

According to Reuters, the offer contained two separate proposals, with full payment on the principle value of their bonds plus 50 percent for holders of defaulted debt who never joined the U.S. lawsuit and a 30 percent reduction on a creditor's total claim, than can be reduced to 27.5% if signed in the next two weeks for all creditors who have sued Argentina through the U.S. law courts.

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