Argentina has taken another step towards ending its 14-year dispute with holdouts that has kept the country locked out of international financial markets. Court-appointed mediator Daniel Pollack announced on Friday that the country has settled with another 115 individual creditors holding defaulted sovereign bonds for $155 million.
In the last six weeks, Buenos Aires has reached several major agreements with creditors, who for the most part have given up their oversized claims and agreed to take about 70-75 cents on the dollar. For example, on Feb. 5 the government committed to spending $6.5 billion to settle more than $9 billion worth of claims in U.S. courts. As of now, Argentina has reached agreements with more than 85% of the remaining holdouts.
The country’s U-turn from intransigence with holdouts to eagerly reaching agreements is due to the new boss in Buenos Aires, President Mauricio Macri. Earlier this month, Blouin News reported on the new chapter of Argentina’s economic and foreign policies since Macri took office in December. Macri’s administration moved quickly to dismantle his populist predecessor Cristina Fernández de Kirchner’s complicated and burdensome network of protectionism, currency manipulation, and excessive energy subsidies.
These settlements still need the Argentine Congress to lift two laws enacted under Kirchner’s presidency that aimed to permanently end any future negotiations on the defaulted bonds. But indications look good on that front – on Wednesday, the lower house of Congress voted 165 to 86 in favor of removing those legal impediments. A debate in the Senate is forthcoming, and a vote will be held on March 30.
The government estimates that it will cost $12.5 billion to settle with all holdouts, and it is selling bonds in order to pay them in cash. However costly, this is the right move, and it will show the financial world that Argentina can be trusted again.