If you’ve been following news of the ongoing debt negotiations between the US and Argentina, then you know that the situation has been deteriorating steadily over the summer. As we move into fall, it would appear we now have on our hands a full-fledged international advocacy ad war complete with mudslinging and name-calling.
How did we get here? And where do we go from here?
A quick recap: Argentina began a process of debt restructuring in 2010 so that it could resume payment on tens of billions of dollars worth of the sovereign bonds it had defaulted on in 2002. Most bondholders agreed to participate in this restructuring by accepting Argentine President Cristina Kirchner’s deal to repay them reduced or deferred payments.
But some, like Paul Singer, founder and CEO of hedge fund Elliot Management Corporation, held out for full repayment. In 2012, Singer took his case to a federal judge in New York who ruled that the Bank of New York would be held in contempt of court if it made any payments to bondholders without Argentina paying back Elliott in full.
Which brings us to present-day: Argentina appealed to the US Supreme Court in June, but the Court declined to hear the case. Which means Argentina is in default.