BUENOS AIRES, Sept 4 Argentina's Senate voted
Wednesday to indefinitely open a bond swap of defaulted debt as
part of a bid to signal the country's eagerness to accommodate
"holdout" creditors ahead of a review by the U.S. Supreme Court.
The government of President Cristina Fernandez said last
week that it was reopening a bond exchange after a U.S. court
ruled it was unfairly excluding holdout hedge funds that
rejected restructuring plans in the past.
The 2nd U.S. Circuit Court of Appeals in New York issued a
stay delaying implementation of its order to pay holdout
creditors $1.33 billion pending a review by the U.S. Supreme
Court, which starts its new term in October.
Argentina has refused to pay holdouts unless they accept the
same terms used in its last exchange in 2010.
Around 93 percent of creditors accepted restructurings in
2005 and 2010 that gave them less than 30 cents on the dollar,
while holdouts have fought for the full amount in the courts.
The new debt swap will apply the same terms as those of
Argentina's 2010 exchange.
Apart from being open-ended to encourage creditors to opt in
without deadline pressure, the new swap will also offer bonds
governed by foreign law, a government source told Reuters on
Friday - part of Argentina's less defiant approach to holdout
creditors it calls "vulture funds."
The legislation, approved 58-8 by the Senate late on
Wednesday, is expected to be passed into law by the House of
Representatives in coming weeks.
The defaulted debt swap will be the country's third in less
than a decade as it continues to struggle with the legal and
economic fallout of lingering unpaid debt in the market after
its record $100 billion default in 2002.
If Argentina refuses to pay the holdouts in full, U.S.
courts could block payment overseas to bondholders who opted to
restructure in the past - potentially triggering another debt
crisis and undermining a recovery in South America's