May 29, 2014 / 2:45 PM / 4 years ago

Argentina says may consider deal with holdout bondholders

BUENOS AIRES, May 29 (Reuters) - Argentina said on Thursday the country might consider negotiating a deal with holdout bondholders who refused previous restructuring deals stemming from its 2001/02 sovereign default and have pursued the country in U.S. courts.

After years of litigation with holdouts, the U.S. Supreme court will decide on June 12 whether to hear Argentina’s case appealing against rulings of lower court cases ordering it to pay back the holdout bondholers back in full.

“We have one last instance in order to end this process of debt restructuring, be it by judicial path or by the path of a voluntary agreement,” Cabinet Chief Jorge Capitanich told a regular news conference on Thursday morning.

Earlier on Thursday, Argentina clinched a landmark deal with the Paris Club of wealthy creditor nations to repay its overdue debt worth nearly $10 billion.

The holdouts case is the last hurdle to the country putting its default on $100 billion in debt behind it and regaining full access to international credit markets.

If the U.S. Supreme Court declines to hear the case, lower court rulings that order the Argentine government to pay the so-called holdout creditors $1.33 billion would be left intact.

Argentina’s refusal to pay could result in U.S. courts enforcing injunctions blocking payment overseas to bondholders who participated in prior restructurings, possibly causing a new default.

Argentine President Cristina Fernandez has previously said the country would never pay the holdout creditors, regardless of the court rulings, partly due to a clause in the 2005 debt swap prohibiting it from offering holdouts better terms.

But that clause expires at the end of the year, opening a new path for Argentina to resolve the last messy legacy of its default. Holdouts have shown willingness to negotiate.

Creditors who had held about 93 percent of Argentina’s bonds agreed to the 2005 and 2010 debt swaps, accepting between 25 cents and 29 cents on the dollar. (Reporting by Alejandro Lifschitz; Writing by Sarah Marsh Editing by W Simon)

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