Argentina to return to markets after deal with bond holders

Thursday, 31. March 2016 15:57

Argentina's Senate voted with 54 for, and 16 against votes, to pay bondholders, who rejected previous restructuring deals of defaulted sovereign debt. The deal is to pay out $4.6 billion to resolve the outstanding claims.

Opponents of the deal, spawned by the new administration headed by President Mauricio Macri, claim it would amount to capitulation to the type of capitalists they describe as "vultures". The last debate lasted more than 12 hours, while the process in the Congress started a month ago.

The House of Representatives approved the bill earlier in March, as majority of the members of the budget and finance commissions signed the official report even before official vote. It was result of compromises in the Congress.

The South American nation seeks to return to international credit markets, since creditors kept avoiding Argentina for last 14 years. The lawsuits rained on the country for the unpaid government bonds, after it defaulted on $100 billion in sovereign bonds. While most creditors re-negotiated swaps for later dates in 2005 and 2010, a group of creditors led by U.S. billionaire Paul Singer filed a suit against Argentina and won.

Holders of the government bonds are also anxious to see out how the economy of Argentina performed in the last quarter, since country's deficit spending is a major source of concern. Earlier, the government in Buenos Aires reported it has cut primary fiscal deficit by 16.4% in the first three months of 2016, compared to the same period a year ago.

The government has plans to issue bonds worth at least $12 billion immediately after the deal is accepted. At least $11.68 billion will be used to pay out the creditors, and another $3 billion in bonds are expected to be collected to cover government's fiscal debt. Argentina will also try to get another $10 to $15 billion for notes to be issued later in the year.

Image: Beta/AP

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