(Adds comments from Argentine finance secretary paragraphs 6-8)
By Richard Lough and Stefano Bernabei
BUENOS AIRES/ROME Feb 2 Argentina has reached a
deal to pay $1.35 billion in cash to a group of Italian
creditors who hold unpaid sovereign debt stemming from the South
American country's record default in 2002, the investors said on
Tuesday.
The deal, which is subject to approval in Argentina's
Congress, represents a payment of 150 percent on the $900
million principal value of the defaulted bonds.
"That means the entire nominal value plus 50 percent
interest," Nicola Stock, president of Task Force Argentina which
grouped together some 50,000 bondholders, told Reuters.
Even though newly elected President Mauricio Macri does not
hold a majority in Congress, Stock said he expected lawmakers to
greenlight the deal swiftly once it returns from recess in early
March.
Finance Minister Alfonso Prat-Gay earlier said the Italian
investors' holdings accounted for 30 percent of all the debt
that is subject to legal claims in a U.S. federal court and 15
percent of the defaulted debt that was not restructured in 2005
and 2010. Argentina defaulted on $100 billion of debt in 2002.
In New York, Argentine Finance Secretary Luis Caputo said
mediated talks with New York hedge funds leading litigation in
the U.S. courts for full payment were "making progress."
He said Argentina could make an offer to the funds on
Wednesday or Thursday, though there are no signs a deal is
close.
Asked how far apart the two sides were, Caputo said: "I wish
I knew."
While the agreement with Italian creditors is a boost for
Macri, it may not strengthen his government's negotiating hand.
"Argentina still has no leverage in that they want the deal
more than the bondholders," said Siobhan Morden, head of Latin
America fixed income strategy at Nomura.
Argentina needs a deal to emerge from default and tap global
credit markets at more affordable rates.
Last month, Prat-Gay said the previous government's failure
to reach a deal with holdout creditors had cost the economy,
with creditor claims in New York rising to $9.9 billion from
$2.943 billion initially.
Prat-Gay stressed on Tuesday that Argentina was committed to
finding a quick and fair settlement with the U.S. investors.
The preliminary accord with some 50,000 Italian bondholders
underlines the divergent views among the hedge funds and other
"me-too" claimants who have joined the litigation about what an
acceptable agreement looks like.
"The difficulty that we have is that some bondholders want
to receive a level of interest that is unacceptable under any
legal criteria," Prat-Gay said.
(Additional reporting by Daniel Bases in New York; Writing by
Richard Lough; Editing by Chizu Nomiyama, W Simon, Lisa Shumkaer
and Bernard Orr)
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