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Hedge fund investor Paul Singer wins 13-year battle with Argentina

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(Credit: Adam Jeffery/CNBC/NBCU Photo Bank via Getty Images) CNBC EVENTS -- Pictured: Paul Singer, Founder and President, Elliott Management, at the 2015 Delivering Alpha Conference on July 15, 2015 -- CNBC Events - Delivering Alpha 2015
March 2
5:03 AM 2016

The 13-year long battle between hedge fund investor Paul Singer and Argentina is over now. Singer's Elliott Management and Argentina government led by new President Mauricio Macri have reached to an agreement. The Argentina government will pay $4.65 billion cash to Paul Singer.

Commodity-rich Argentina is suffering from slump in commodities markets. Argentina's new President Mauricio Macri has taken a key decision on restructuring major part of debt remaining from default. Macri is aiming to make the country free from all debt barriers enabling the nation to tap global markets for mobilizing funds. 

Bloomberg reports that billionaire hedge fund investor Paul Singer and Argentina's new government have reached an agreement to end the battle over a decade. Argentina has agreed to pay holdouts of $4.65 billion, which accounts for 75 percent of the claim. Paul Singer's Elliott Management will receive $4.65 billion cash from Argentina government as part of the agreement.

Edwin Gutierrez, a money manager at Aberdeen Asset Management, said "It's definitely the longest, high profile holdout case I've ever seen. There are some, but none have been this high profile and of this magnitude."

Argentina witnessed biggest sovereign default ever 15 years ago. 13 years ago, Paul Singer sued the government for repayment. Now, both the parties have reached to an agreement on settlement.  
President Macri said that Argentina had gone through 12 years of policy deterioration. With the latest settlement with Paul Singer, the Republic of Argentina can now enter global credit markets. The latest settlement as Argentina believes will strengthen investor confidence in emerging debt markets, according to Forbes.

After the agreement news, The Argentine government's bonds rose in the market. The amount includes $4.4 bln for 75 percent of almost $5.9 bln in principal and interest of claims in New York, as well as $235 million for claims outside that jurisdiction and some of the holdouts' legal fee.

Suffering from stringent economic crisis, Argentina decided to default on $132 billion debt in 2001. Subsequently, the nation gained from a commodity boom during the period of President Nestor Kirchenr. Argentina had taken up two debt restructuring plans in 2005 and 2010. About 90 percent bondholders took part in these two schemes and this got them to 30 percent of face value of the debt. Argentina's bonds are governed by New York laws, according to The American Prospect.

Former President Cristina Fernandez de Kirchner seemed to have disinterest in adhering to the US laws, while the court case ran for over a decade. New York courts have appreciated Macri's efforts to bring the issue to an amicable end. Macri commenced his term as President of Argentina in December 2015. 

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