(Recasts with meeting set for talks; adds statement from mediator, comment from Senate leader)
By Tariro Mzezewa, Nate Raymond and Nicolás Misculin
NEW YORK/BUENOS AIRES, Dec 21 (Reuters) - Argentina’s new government and holdout bondholders are to meet in the second week of January to start “substantive” talks toward settling a more than decade-old sovereign debt dispute, the U.S. court-appointed mediator said on Monday.
The talks would mark a major breakthrough in the dispute, which has caused Argentina to be shut out of the international capital markets and encouraged the prior governments of both Cristina Fernandez and Nestor Kirchner to adopt unorthodox economic policies.
Mauricio Macri, the first non-Peronist president in more than a decade, was sworn into office on Dec. 10. He has moved to start reversing some of the populist policies of the prior governments and said it was a priority to settle the debt issue.
Daniel Pollack, a New York lawyer who is the mediator, said in a statement that he met for about one hour on Monday in his office with Argentina’s newly installed finance secretary, Luis Caputo, and the vice chief of the cabinet, Mario Quintana.
“The meeting was constructive, covering a range of issues, and it was agreed that they will return to New York City in the second week of January to commence substantive negotiations with the Bondholders,” Pollack said in a statement released through his law firm, McCarter & English.
U.S. District Judge Thomas Griesa, who has long overseen the litigation, urged in a hearing last Thursday that Argentina and its creditors resolve the dispute stemming from the $100 billion default on sovereign bonds in early 2002. The case is being heard in the United States because the bonds were issued under U.S. law.
“The government will start negotiating now and once they have the blueprint of a deal it will be brought to Congress. It should all be settled by the middle of the year,” said Senate leader Federico Pinedo, who is a close ally of Macri.
Pinedo said there a chance that Congress will be presented with the outline of a deal as soon as next month.
“It may happen that the president decides to raise it in a special in January or February. That would be doable,” Pinedo said.
Holdout investors led by Elliott Management’s NML Capital Ltd and Aurelius Capital Management have a judgment in their favor of $1.33 billion, plus interest, which has brought their total closer to $2 billion, sources with direct knowledge of the situation say.
A spokesman for Elliott declined to comment on Monday’s statement. A representative for Aurelius was not immediately available.
Monday’s meeting between Caputo and Pollack was the second since the new Argentine government took office.
Caputo, shaking his head, did not answer any questions upon entering Pollack’s office building via a side entrance on Monday. He and Quintana were not seen leaving by a small handful of reporters and photographers who were waiting outside Pollack’s office.
Solving the sovereign debt dispute between Argentina and investors, who rejected two prior restructurings in 2005 and 2010, is seen as critical to getting the Latin American nation’s economy on a more stable growth path.
Pollack has said the total amount of debt held by bondholders with judgments against Argentina is approximately $10 billion. These judgments are based upon the principal of equal treatment, referred to in the bond agreement document as the pari passu clause.
In addition to NML and Aurelius, bondholders who did not participate in prior restructurings filed “me too” claims before Griesa on the same pari passu principle and were recognized by the court in October.
Over the course of the two restructurings, 92 percent of bondholders accepted the terms offered by Argentina, which left them on the whole being paid less than 30 cents on the dollar.
Argentina defaulted again in July 2014 after it refused to honor Griesa’s order to pay NML and Aurelius at the same time it paid these bondholders their principal and interest. (Reporting By Tariro Mzezewa and Nate Raymond in New York and Nicolas Misculin in Buenos Aires; Writing by Daniel Bases and Dan Burns; Editing by Phil Berlowitz and Leslie Adler)