Argentina's Senate approved an agreement to pay billions of dollars to holdout creditors early Thursday, ending a 15-year battle over a catastrophic debt default that locked the country out of capital markets.

The vote clears the final legislative hurdle for the deal and paves the way for the government to pay off creditors that rejected Argentina's efforts to restructure its mountain of defaulted debt.

After nearly 15 hours of debate, the deal passed with 54 votes in favor and 16 against. That seals the agreement, which passed the lower house two weeks ago.

Conservative President Mauricio Macri's administration has called the deal bitter, but necessary, to end the country's status as a pariah on international capital markets.

Argentina has effectively been locked out of them since it defaulted on nearly $100 billion in 2001, the largest in history at the time.

Buenos Aires persuaded nine out of 10 of creditors to write down 60 to 70 percent of the face value of their bonds, but lost a lawsuit in US federal court to hedge funds demanding full payment.

After years of combative relations with the holdouts -- dubbed ‘vultures’ by former president Cristina Kirchner -- Macri promised to settle the dispute after taking power in December.

His more conciliatory approach is part of a broader push to reverse the slowdown of Latin America's third-biggest economy.

The pro-market president has spent his first four months undoing his leftist predecessor's protectionist legacy, devaluing the peso currency, scrapping import restrictions and slashing export taxes.

- Macri victory -

The new bill allows the government to issue $12.5 billion of bonds to settle with the two US hedge funds that sued it, as well as other holdouts.

Those two -- Aurelius Capital Management and billionaire speculator Paul Singer's NML Capital -- settled for a total of $4.65 billion.

The $12.5 billion will be one of the largest debt issues by a developing country in two decades.

The bill's initial passage in the lower chamber of deputies was a major victory for Macri, who had to win opposition votes in a Congress where his party lacks a majority.

He pulled off a similar coup in the Senate on Thursday morning, where Kirchner's party, the Front for Victory, has 42 of the 72 seats.

Nearly half its senators reportedly caved in to pressure from the governors of their provinces, who need loans to fund infrastructure projects.

Angel Rozas, from a party allied with the president, denounced the holdouts

as ‘evil people’, but said Argentina had no choice but to pay up after losing in court in the US.

‘I do not expect the sky to rain dollars, but it is better not to be in technical default,’ Rozas said.

Macri's administration says it is paying for the negligence of the previous government, which scored political points attacking the ‘vultures’ while letting the interest on the unsettled debt accumulate.

The president has warned not paying the debts could lead to hyperinflation and painful economic cuts.

The judge in the US case, Thomas Griesa, has agreed to lift an injunction that barred Argentina from borrowing new money to pay off the old claims if the Senate removed the legal barriers to payment.

Not all remaining holdouts have agreed to the deal, however, and analysts have estimated the full cost of settling all outstanding claims could total $15 billion.