A Country Crashed and Burned
Apr 1, 2002
With the Argentine economy quickly crumbling and the rules changing with such bewildering speed, little is certain in the debt negotiations of local companies and their creditors.
Argentina's economy is wrecked, the currency ripped to shreds and the people more cynical than ever. Violence is in the air. The government of President Eduardo Duhalde is incapable of enunciating, much less executing a coherent set of policies.
Still, life must go on and Argentine companies have a monumental task head to repair their balance sheets and try to stay in business. With very few exceptions, corporate Argentina is bankrupt. Even strong, formerly well-capitalized exporting companies with overseas subsidiaries have defaulted - involuntarily - on their debt. Although a few private-sector borrowers have already knocked together deals with their creditors, it will be many months, perhaps years even, before the country's companies and banks have settled on new payment rules with their creditors.
Corrado Varoli, head of Latin America at Goldman Sachs, says, "Most companies are in the process of evaluating [their options] and it is too early to...
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