Buyer Beware

Buyer Beware

Corporate & Sovereign Strategy

Ecuador's 2006 presidential campaign rattled overseas investors with talk of an Argentina-style restructuring. Buenos Aires paid a hefty price for repudiation, but not enough to dissuade other sovereigns from at least considering following suit. A recent study estimates that taxpayers and shareholders worldwide incurred $74 billion in direct and indirect costs from Argentina's delinquency. And there is renewed pressure on the major economies, in particular the US, to make Argentina pay. Junk rated sovereigns coasting on a wave of excess liquidity have so far been spared retaliation from most investors. But damage has been done to the emerging markets asset class and the questions remain: Ho

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