Argentina has reached a preliminary agreement to end one of the longest and most contentious battles over government debt in history, potentially handing a big payday to hedge funds that held out for a decade and a half.

The government agreed in principle on Sunday to pay $4.65 billion to Paul Singer's Elliott Management and three other hedge funds to settle their claims on the country's defaulted sovereign bonds, according to Daniel Pollack, a mediator charged by a US judge with overseeing settlement of the dispute.