Argentina reaches debt agreement with holdouts

Argentina has reached an agreement with a group of holdouts suing the country in a U.S. court over expired debt bonds, a court-appointed mediator said Tuesday.

"Argentina has reached an agreement in principle to settle the Brecher Class Action," said mediator Daniel Pollack in a statement, referring to one of the bondholders Henry Brecher. He added that "the exact size of the settlement will not be known for several weeks."

On Feb. 5, Argentina's new government offered 6.5 billion U.S. dollars to pay the bondholders, and according to Pollack, "the settlement fits within the numerics of the proposal."

Pollack said two of six main bondholders in this class action had accepted the offer, which represents an approximate 30 percent discount compared with the 9 billion dollars in claims, according to U.S. media sources.

The rest have been given until Friday to respond to the offer, national news agency Telam said. Other suits are pending.

The long-running legal dispute with bondholders suing to claim 100 percent of the value of the bonds, plus interest, had dried up financing for Argentina's former government.

The legal wrangling also prevents Argentina from making debt payments to other creditors.

The debt bonds date from the country's economic crisis and ensuing default in 2002.

While the government restructured its debt with major creditors, including as international lending institutions and other countries, a handful of hedge funds, also known as vulture funds, refused to enter into those negotiations, demanding that they should be paid in full. Endi