Buenos Aires province has settled a lawsuit over defaulted debt with two hedge funds after losing in a New York court in 2024.

The provincial authorities handed the hedge funds US$106 million in bonds and cash, a source in the government told the Herald.

In October 2024, a New York court ordered the Argentine province to pay US$124.7 million to hedge funds Glacial Capital and TRSE Holdings. A source in the provincial government said that when accounting for interest, the total amount would have been US$169 million. The settlement they ultimately paid equals 63% of that amount.

The defaulted bonds were issued in 2011, when Daniel Scioli (a Peronist, at the time) was governor. Scioli was succeeded in the governorship by María Eugenia Vidal (of the conservative PRO party), who was in the role between 2015 and 2019. The bonds were due, and not paid, in July 2020, months after Vidal was replaced by current Peronist Governor Axel Kicillof.

In August 2021, the province successfully exchanged 97.66% of the bonds’ total outstanding principal under foreign law. However, Glacial Capital and TRSE Holdings chose not to participate in the deal.

“The debt stock increased excessively during the period 2016-2019, based on issuances in the international capital market for more than USD 5 billion,” said a communiqué by the Buenos Aires province Economy Ministry, referring to Vidal’s governorship.

The local government added that the agreement involves conditions similar to those accepted by the vast majority of bondholders during the restructuring. The funds obtained “the same amount of USD Series A bonds maturing in 2037 that they would have received if they had entered the 2021 exchange, and a cash amount equivalent to the services accrued and paid on the bonds from 2021 to the present.” 

A source at the provincial government said that the agreement is equivalent to obtaining financing until 2037 at a record rate for the province of only 3.25% per year.

The province was also facing other lawsuits filed in Germany over the 2021 debt restructuring. However, those were recently withdrawn, meaning that all of the lawsuits against the province due to the restructuring have now been resolved, the local government said.

The lawyer representing Glacial Capital and TRSE is Dennis Hranitzky, who previously represented NML Capital — a fund that claimed in 2012 that it was owed US$370 million from Argentina’s 2002 debt default. In October of that year, he famously boarded Argentina’s ARA Libertad frigate, which was docked in Ghana, to request its embargo after a court ruled in NML’s favor. The ship was detained for 77 days.