(Refiles to fix typo in headline)
BUENOS AIRES, June 22 Argentina is considering
making an initial payment to "holdout" creditors before asking
to extend negotiations to officially reach a settlement next
January to avert a disastrous debt default, a leading local
newspaper said on Sunday.
Argentina has been locked for more than a decade in a fight
in U.S. courts with creditors who refuse to accept a 2005 and
2010 revamp of debt securities and demand to be repaid in full.
La Nacion newspaper cited unnamed government officials as
saying President Cristina Fernandez was considering paying these
holdout creditors between $300 million and $400 million as a
sign of good faith.
"The initial sum would be equivalent to a 65 percent
reduction compared with what was paid to restructured
bondholders who entered the 2005 and 2010 swaps," La Nacion
quoted a government official as saying.
The Argentine government would then seek to extend
negotiations and in 2015 to clinch a payment deal in the form of
long-term bonds, similar to deals reached with the Paris Club or
Spain's Repsol, the paper added.
The government was not immediately available for comment.
Such a plan could only work with the agreement of the hedge
funds who demand full payment and of the U.S. judge hearing the
case, and that is far from guaranteed.
Lawyers representing Argentina have said officials will
travel to the United States this week for negotiations.
U.S. courts have ruled that Argentina cannot continue to pay
creditors who agreed to restructure their bonds after its
2001-02 default on $100 billion in debt unless it also pays
$1.33 billion to the holdouts demanding full payment.
Fernandez, a leftist, had refused to even consider
negotiating with the holdouts. She has portrayed them as
"vultures" picking over the bones of the 2002 debt crisis, which
thrust millions of middle-class Argentines into poverty.
But in a shift, she said on Friday her government would
negotiate with all of Argentina's creditors in a bid to avoid a
new debt default that would further harm the ailing economy.
A provision called Rights upon Future Offers (RUFO), which
expires on Dec. 31, precludes Argentina from voluntarily
agreeing better terms with the holdouts, complicating
negotiations this year.
The next bond payment is due on June 30. If Argentina does
not make that payment on time, it would have a 30-day grace
period before falling into technical default
To avert another catastrophic default, La Nacion said the
government would ask U.S. courts to reinstate a stay on an
injunction that bars payment to exchange bondholders via the
U.S. banking system unless holdouts are paid at the same time.
"Officializing (a deal) in January would allow for the end
of the RUFO clause," La Nacion quoted a government source as
saying. "We depend on (U.S. District Court Judge Thomas)
Holdout creditors are led by NML Capital Ltd, a division
of billionaire Paul Singer's Elliott Management Corp, and
Aurelius Capital Management, chaired by Mark Brodsky.
While many Argentines detest the holdout creditors, there is
a growing push for a deal to avert another crisis and put the
debt saga to bed.
Faced with dwindling foreign exchange reserves, a looming
recession and a $6 billion principal and interest payment on
another bond that matures next year, Argentina cannot risk
closing the door on access to international capital markets to
solve a coming cash crunch, experts say.
(Reporting by Jorge Otaola; Writing by Alexandra Ulmer; Editing
by Gareth Jones)