The Argentine Senate voted last night in favour of a bill to pay holdout creditors, known as vulture funds, and end a 15-year debt conflict.
After a 12 hour debate, the bill received 54 votes in favour, while 16 opposed it.
The bill sanctioned last night repeals the so-called ‘Lock’ and ‘Sovereign Payment‘ laws, and authorises the government to raise US$12.5bn to pay holders of Argentina’s defaulted debt. It had been approved by the lower house of Congress on 16th March, and so will now be sent to the president to be signed into law.
According to the February agreement with the holdouts, Argentina now has until 14th April to honour and uphold this new bill. The government says it “is doing everything possible to comply with the court decision”, in which it must repay US$11.9bn.
There is set to be an investment “road show” led by Economy Minister Alfonso Prat-Gay, and commencing on 11th April. According to Reuters, Prat-Gay has already identified seven major banks to act as bookrunners for the forthcoming bond issue, one of the largest from an emerging market in the last decade.
The vote represented a triumph for President Mauricio Macri, who has said settling the long-running debt conflict was essential for the country’s economic future.
He said this would end Argentina’s status as a “financial pariah”, and enable it to borrow at a more attractive rate of interest.
“Lack of access to credit has cost Argentina $100 billion and more than two million jobs that were not created,” he previously stated during his speech before Congress on 1st March, 2016.
It also marked a political victory as the president secured cross-party support for the first major bill presented by his administration in Congress. Macri’s coalition, Cambiemos, has a minority in both legislative houses.
The bill yesterday was approved with support from 23 senators from the opposition Frente para la Victoria (FpV).
Miguel Pichetto, leader of the FpV in the Senate, support the bill, saying that “[ex-president] Néstor Kirchner would have paid the vultures”.
Others remained skeptical of the bill during the debate, with Senator Anabel Fernández Sagasti (FpV) disclosing that the government is “trying to sell us a crisis so that we buy expensive debt with bad terms. They are leading us straight to hell”.
Senator Julio Cobos (Mendoza-UCR) led the defence of the bill for Cambiemos, believing the current measure to be a necessity following years of litigation. “We are acting correctly. Could a better agreement have been reached? Perhaps, perhaps not. But we have a ruling against us, and it is very difficult to come to an agreement in such a scenario.”