NEW YORK: Argentina's new market-friendly government has struck a $4.65-billion tentative deal with its main holdout creditors, ending a bitter 15-year battle and opening the door for the South American country to escape financial pariah status.
Court-appointed mediator Daniel Pollack said in New York on Monday that the agreement in principle would see Buenos Aires "settle all claims" with the payment to NML Capital, Aurelius Capital Management and two other hedge fund creditors holding long-defaulted bonds.
Pollack told journalists that the funds must be handed over in cash, in "green US dollars," by April 14, or the whole deal is "terminated."
Later Monday, Argentine Finance Minister Alfonso Prat-Gay said Buenos Aires would pay 75 percent of the bonds' value, or a total of about $6.5 billion.
The deal made good on a promise by President Mauricio Macri, who took office in December, to reverse his predecessor Cristina Kirchner's refusal to bargain with hedge funds she saw as out to cripple the debt-ridden country.
The International Monetary Fund is "very encouraged" by the agreement, a spokesperson said, calling it an "important step towards allowing Argentina to return to financial markets and restore its financial position."
A US Treasury Department statement hailed the deal as a "positive development for the entire global financial system."
"We look forward to full implementation of the agreement, which should help Argentina return to the international capital markets and promote strong and sustainable growth," it added.
The announcement came on the eve of a court hearing Tuesday in New York where an injunction effectively blocking Argentina's access to new loans while the dispute lingered is expected to be lifted -- another step in the financial rehabilitation of Latin America's third biggest economy.
"It gives me greatest pleasure to announce that the 15-year pitched battle between the Republic of Argentina and (NML owner) Elliott Management, led by Paul E. Singer, is now well on its way to being resolved," Pollack said in a statement, calling Macri's turnaround "heroic."
A spokesman for Elliott, who led the creditors, confirmed, saying: "We are pleased to have reached an agreement with Argentina."
The conflict dates back to 2001, when Argentina defaulted on nearly $100 billion in debt. Nearly all the country's creditors eventually accepted to write off 70 percent of their bonds in a restructuring that was meant to allow the country to get back on its feet.
But seven percent of the creditors refused. Elliott, head of a New York hedge fund which bought up debt after the default, sued together with Aurelius for full payment on the face value of the bonds.
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