BUENOS AIRES, Oct 10 (Reuters) - Argentina will offer about$500 million to resolve disputes with corporations at a WorldBank arbitration panel, a financial daily newspaper reported onThursday.
Ambito Financiero reported on its website, without citingsources, that the payment would be made in sovereign bonds tofive companies that have filed complaints over a range ofgrievances at the World Bank's International Centre forSettlement of Investment Disputes.
Representatives at Argentina's economics ministry could notimmediately be reached for comment on the report.
The decision coincides with a sensitive time in the SouthAmerican country's battle in U.S. courts with hedge funds thatrefused to take part in two debt restructurings followingArgentina's 2002 default.
Argentina hopes the Obama administration will ask the U.S.Solicitor General to present arguments to the U.S. Supreme Courton whether the case merits the court's attention, after a lowercourt ruled in favor of bondholders who will not accept reducedpayments under a restructuring agreement.
The International Monetary Fund and some U.S. officials havesaid they were concerned that if Argentina were to be forced topay the non-participating investors, it would become moredifficult for cash-strapped countries to restructure their debtsin the future.
The Ambito Financiero newspaper said the companies to bepaid include France's Vivendi SA, British electric andgas utility National Grid PLC and Continental CasualtyCompany, a unit of Chicago-based CNA Financial Corp.
U.S.- based water company Azurix and Blue Ridge Investments,a subsidiary of Bank of America Corp, will also receivecompensation, the report said.
Economy Minister Hernan Lorenzino, in Washington this weekfor World Bank and International Monetary Fund meetings, aims tounlock up to $1.8 billion credit lines from those institutions,the newspaper said.
Argentina's sovereign default in 2002 effectively ended thecountry's ability to tap global bond markets. Falling levels offoreign direct investment and a huge bill for gasoline importshave led to dwindling foreign reserves, making additional creditlines crucial to finance government spending and supplyindividuals and businesses with foreign currency.
In May 2012, the United States suspended Argentina from theU.S. Generalized System of Preferences program, which waivesimport duties on certain goods from developing countries, afterthe South American nation failed to pay about $300 million incompensation awards in disputes involving Azurix and Blue RidgeInvestments. It was the first time a country had been suspendedfrom the program for failing to pay an arbitration award.
The United States imported $477 million worth of goods fromArgentina under the program in 2011, which was about 11 percentof total U.S. imports from the country that year.
- Financials Industry
- Ambito Financiero
- International Monetary Fund