Argentina sovereign debt: A question of justice

Jan 1, 2013

The specter of default once again hangs over Argentina. While the implications could prove far-reaching for sovereign debt restructurings, hopes are high for an orderly resolution

By Ben Miller

Click. Click. Click. At some point on December 15, $3.3 billion in coupon payments to holders of Argentina’s 2017 restructured bonds made it through the clearing mechanisms at the Bank of New York and, via other intermediaries, into bondholders’ accounts.

That’s what they ordinarily do. But just weeks earlier, it was anything but certain that these payments would be made.

A decision in October by a New York district court had thrown into doubt the future of payments to bondholders in 2005 and 2010 exchange offers. Argentina was ordered to pay $1.3 billion immediately to holdout creditors remaining from its $81 billion 2001 default – even if that meant seizing payments in US clearing mechanisms.

After the initial order and subsequent clarification at the request of an appeals court, Argentina was left with just three weeks to find a solution – a prospect that...

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