Argentina, 'vultures' said close to deal on bonds

Argentina and the two hedge funds it has branded "vultures" are close to a deal to settle the funds' bond claims, a lawyer said Wednesday.

"We are this close to a deal," Matthew McGill, a lawyer for one of the two funds, NML Capital, said in the federal district court in Manhattan.

"We have an agreement on economic terms," he said, without explanation.

If true, an end to a decade-old battle over Argentina's bond repayment obligations 15 years after it defaulted on $100 billion in debt could be close.

The other of the two hedge funds which led the fight in US courts against Buenos Aires's refusal to pay them, Aurelius Capital Management, had no comment on what McGill said. Argentine officials would also not comment.

And the court-appointed mediator in the battle, Daniel Pollack, quickly issued a statement criticizing McGill for violating "the confidentiality of the discussions between the parties, which is an inviolable principle of all negotiations through me."

Argentina has battled NML and Aurelius for years, arguing that by refusing to take part in the restructuring of its defaulted debt -- which 93 percent of creditors accepted -- they had given up their right to repayment on the bonds they held.

It also labeled them vultures for having scooped up more than $1 billion worth of Argentine debt at very deep discounts at the time of the default with the aim of forcing the country in court to repay the full value.

But the new government of reformist President Mauricio Macri, which took office in December, has pledged to resolve the $9 billion in claims of the two and other "holdout" creditors in order to clear the case, which has mostly blocked Argentina's access to global capital markets.

The ability of Aurelius and NML to win support from New York Judge Thomas Griesa for their claims in 2012 shook the markets of sovereign debt.

It signaled that, when a country defaults on its debts and needs to restructure them -- which often requires creditors to accept significant losses -- there is little to compel a creditor to go along with the restructuring deal.

Governments and world bodies like the International Monetary Fund worry that would make restructuring a country's debts, to get it back on its financial feet, will be harder in the future because it will be more difficult to convince enough bondholders to go along with it after Griesa's ruling.