Argentina To End Dispute With Bondholders, Starting In New York

Argentina will seek to settle with bondholders who are suing it in New York over unpaid debts before seeking a deal with creditors elsewhere, Finance Minister Alfonso Prat-Gay said Thursday.

"What we want is to resolve all the cases with a firm sentence in the New York judiciary as a first step, and then of course we will, in a second step, deal with the cases pending in other jurisdictions," Prat-Gay told reporters.

The minister added that any preliminary deal would be subject to approval by the Argentine Congress.

Prat-Gay told a news conference in Buenos Aires Wednesday it was in Argentina's interests to reach a deal. The previous government's failure to do so had cost the economy, he said, with creditor claims in New York having risen to $9.9 billion from $2.943 billion originally.

Former President Cristina Fernandez de Kirchner had refused to settle with the hedge funds like NML Capital Ltd. that bought Argentine bonds on the cheap after its massive 2002 default and then held out for better terms when Argentina restructured its debt.

The creditors are broadly known in Argentina as "vultures" for picking on the carcass of the economy after the default plunged millions of Argentines into poverty. Not all the holdouts bought their bonds on the cheap, however.

In addition to the debt battle, Argentina's new center-right government, which took office in December, also inherited a primary fiscal deficit of 5.8 percent of GDP in 2015, Prat-Gay said.

"The primary fiscal deficit is at its highest in 30 years," he said. Fernandez's two terms were characterized by heavy government spending that aimed to boost the domestic economy.

Mauricio Macri was elected president in November after promising free-market solutions to Argentina's long list of economic woes.