Shortly before 11 AM today, President Mauricio Macri’s Cambiemos party managed to obtain quorum in the Senate — the number of legislators necessary to hold a session — in order to begin the debate on the bill which outlines paying the holdouts, known here as vulture funds, that have been litigating the country over defaulted bonds for the last 15 years. According to La Nación, Macri’s administration will be counting on 50 senators to vote in favor of the bill. The Senate requires one more than half of representatives to vote in favor of the bill in order for it to pass.
The Victory Front (FpV) caucus — by caucus we refer to a group of legislators from the same party who vote along the same lines — is divided on the issue. The Senate FpV caucus has not seen the split that occurred in the Lower House caucus (over disagreements on how they ought to provide opposition to the ruling Cambiemos coalition) and still enjoys a majority.
However, the vote is set to be divided. The head of the Senate caucus, Miguel Pichetto, has said that he will support the bill, even going so far as to say that “[former President] Néstor Kirchner would have paid the vulture funds.” This has obviously not gone down well with those who oppose the bill, but according to Pichetto, the divided vote is simply a reflection of “the caucus’ freedom,” where “the discussions are horizontal.”
The bill was passed in the Lower House on March 16th following a marathon 20-hour debate. If the bill passes the Senate, the Casa Rosada will be able to pay off the holdouts who have held out on Argentina’s previous restructured payment offers. It would be a huge political victory for President Mauricio Macri’s Cambiemos coalition, which has made finding a solution to the vulture funds conflict a policy centerpiece.
The bill, called the “Public Debt Normalization and Access to Public Credit Law,” includes:
- Ditching the Lock Law, which prohibits Argentina from offering a better deal to the holdouts than the one they presented in 2005 and 2010 (the restructured debt)
- Ditching the Sovereign Payment Law, which requires payments to be made locally and not through the US
- Enabling the government to incur more debt, this time of up to US $12.5 billion, half of which will be destined to paying the holdouts
All of this should happen before April 14th, the final deadline to pay off the holdouts: if the bill goes through today, there is a higher chance of meeting that deadline. A vote on the bill is expected to happen at around midnight.
Just in case you could have possibly forgotten, this all goes back to Argentina’s economic meltdown in 2001, when the country defaulted on its international debt. A group of creditors purchased some of the defaulted bonds and refused to accept debt restructuring plans in 2005 and 2010 that would have exchanged the original bonds for bonds worth 30 cents on the dollar, insisting instead the debt be repaid in full. Hence former President Cristina Fernández de Kirchner’s nickname for them, “vultures”: she also swore that Argentina would “never” pay. New York Judge Thomas Griesa ruled in the holdouts’ favor and Argentina is now faced with negotiating the payment.