Hedge funds have forced Argentina to pay the defaulted 2001


Argentina reached an agreement on repayment of debts before foreign creditors who refused to restructure the state loans in the country after the default in 2001. According to Bloomberg, Buenos Aires will pay a group of investors led by hedge Fund Elliott Management Corp. billionaire Paul singer’s $4,65 billion.

In addition to Elliott, the group includes hedge funds Aurelius Capital Management, Davidson Kempner and Bracebridge Capital. As reminds BBC News, they bought government bonds at a large discount after the default.

The sum of $4,65 billion that will go to hedge funds, is 75% of principal and accrued interest. The deal was concluded on Sunday, however, the court-appointed mediator in the negotiations Argentina and creditors Daniel Pollack said on Monday.

As Financial Times notes, the deal was a significant success for the head of state Mauricio Macri. Resolve a dispute with the creditors was one of the main electoral promises of the President who led the country last year. His predecessor Cristina Fernandez de Kirchner called the creditors “vultures” and said that Argentina is not going to pay his debt.

According to Pollack, Argentina also agreed to pay legal costs of the investors. The agreement must be approved by Congress and will require from the country of the abolition of some laws, notes the FT.

In total, the creditors at the head of Elliott achieve repayment of the debt of Buenos Aires for more than 10 years years. Investors refused to participate in two rounds of restructuring of the Argentine obligations in 2005 and 2010. Then the authorities made the exchange bonds are frozen-in charges, reaching 75%.

Us hedge funds refused to agree to these conditions and began to seek in court the payment of the initial amounts. In 2012, a court in the USA ordered Buenos Aires to meet the obligations. In July 2014, the rating agencies and the U.S. court appointed mediator declared an official default.