Argentina offers $6.5 bn to 'holdout' creditors

Argentina's new government has offered $6.5 billion to settle its long debt battle with "holdout" creditors, the government and US mediator Daniel Pollack said Friday.

Two of six major holdout creditors have accepted the deal, which includes about a 25 percent "haircut" on their claim, while four have not done so yet, according to the government.

The offer was made in New York talks with hedge funds and other creditors who have demanded full repayment of about $9 billion on bonds the country defaulted on 15 years ago.

"Argentina today has released a proposal to settle with and pay the many defaulted bondholders with cases in the federal court in New York," Pollack said.

He said that the proposal was subject to two conditions: That it gains approval by Argentina's Congress, and that it also brings the release of the New York federal court's injunction, which prevents Buenos Aires from paying any other creditors outside the so-called holdout group.

The holdouts, whose decade-long court battle against Buenos Aires was led by two New York hedge funds, are a minority class of creditors which refused to go along with the restructuring of the country's debt after it defaulted on about $100 billion in 2001.

Buenos Aires said it was offering the creditors roughly 75 percent of what they were claiming, covering the face value and accumulated interest on the bonds.

The offer comes days after the government of President Mauricio Macri, which took office in December, reached a deal to pay Italian bondholders $1.35 billion to settle their $2.5 billion in claims dating back to the default.

Macri's predecessor Cristina Kirchner had refused to pay the holdouts, insisting they should have joined in with the 93 percent of the country's creditors which accepted a significant reduction in what they were owed to help the country rebuild its finances.

Kirchner branded the hedge funds which led the holdout claims, NML Capital and Aurelius Capital Management, as "vultures", saying they bought up Argentine debt cheaply around the time of the default and then refused to take part in the restructuring.

Both had yet to say whether they accept or reject the new offer by Buenos Aires.

The funds which accepted the offer were Montreux Partners and Dart Management, according to a government statement.