BUENOS AIRES, Argentina—Argentina and a group of U.S. creditors announced a deal Monday in a longstanding debt standoff, potentially breaking an impasse that has kept the country on the margins of international credit markets and led to a rewriting of the terms of debt issuance and negotiations worldwide.
The deal is a boost for President Mauricio Macri, who assumed power in December after campaigning on promises to modernize South America’s second-largest economy by solving the dispute and attracting foreign investment.
“It gives me greatest pleasure to announce that the 15-year pitched battle between the Republic of Argentina and Elliott Management, led by Paul E. Singer, is now well on its way to being resolved,” arbiter Daniel A. Pollack said in a statement.
Speaking to reporters in New York, Pollack declined to provide more details. He said April 14 was the deadline to finish the deal, but added that it could be extended if both sides agreed. He described grueling negotiations in recent months, joking that it “felt like a thousand years to me.”
The deal “closes a chapter by putting an end to the debt default saga which limited Argentina’s access to international capital markets,” said Alberto Ramos, chief Latin America economist for Goldman Sachs, predicting that it would also lead to an influx of investment in Argentina.
Hours after the announcement, the stock exchange in Buenos Aires closed with a 1.5 percent rise, which analysts said was a sign that investors were cautiously optimistic the dispute is on its way to being solved.
The debt conflict goes back to Argentina’s 2001-2002 financial collapse, when it defaulted on $100 billion in bonds. Most creditors renegotiated in 2005 and 2010 bond swaps. But a group of creditors led by Singer, a billionaire hedge fund manager, refused and took Argentina to court in New York, under whose laws the debt was issued, and won.
U.S. District Court Judge Thomas Griesa in New York has repeatedly ruled against Argentina, saying the country had to pay the holdouts before it could pay other creditors holding renegotiated debt. Those rulings have kept Argentina from accessing international credit markets, forcing it to issue domestic bonds to raise funds and search for backdoor financing from countries like China.
The long, costly fight led to changes in how debt is issued worldwide. Many countries have restructured contracts in attempts to avoid getting into similar situation.
While Macri has good relations with many members of Congress, passage of the deal is not a given. Fernandez’s Peronist Party has a majority in the Senate and the largest bloc in the lower house.
However, the Peronists have been fractured since Fernandez’s chosen candidate, Daniel Scioli, lost the presidential election to Macri in November. And business leaders and governors in Argentina’s provinces have joined the Macri administration in arguing that the country desperately needs foreign investment.
“We want to return Argentina to normality” in the economy, Finance Minister Alfonso Prat-Gay told reporters in Buenos Aires late Monday. “And these discussions in New York were a first step to that.”
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