An End in Sight for Argentina's Debt Battle?

Earlier this week, Argentina’s government came to an agreement with Italian bondholders to settle a $2.5 billion debt for $1.35 billion. Since being sworn into office in December 2015, President Mauricio Macri has been committed to resolving Argentina’s debt issues and reopening the economy to foreign investment. In 2002, Argentina defaulted on $100 billion in debt and has since struggled to pay back its creditors. Former President Cristina Fernandez de Kirchner resisted paying those who refused to settle, calling the hedge funds that led a holdout “vultures.” In 2012, New York Judge Thomas Griesa ruled that the country must pay its creditors back in full, and the U.S. Supreme Court refused to hear Argentina’s appeal in June 2014, which led to another default.

Argentina’s Finance Secretary Luis Caputo spent five days in New York negotiating the deal and is optimistic following the proposal to pay 75% of that which the U.S. Courts ordered. This is the first time Argentina has made a formal offer, and the country is willing to pay $6.5 billion to settle the dispute Officially settling with foreign investors would lift the country’s restricted access to international credit markets and signify an opportunity for the Argentine economy to reboot and receive much-needed foreign investment. Argentina is waiting for replies to the offer from four of the six hedge funds involved. Two have accepted it so far.