Argentina, a country who defaulted on $900 million worth of bonds, believes that after 14 years they are finally able to pay off the debt. Creditors are currently seeking $2.5 billion in outstanding interest payments and Argentina is seeking an 85% write down of the current debt. This "pre-agreement", which would cover around 15% of the holdouts from 2005 and 2010, still has to be approved by Congress. Argentina had a $82 billion sovereign default in 2001, which was the highest in the countries history. Also in 2001, around 93% of bond holders agreed to exchange the defaulted loans for other securities, but at a 65% mark down. Among the investors was Elliot Management, a hedge fund located out of New York, which led to another restructuring of bonds in 2014. This was due to an attempt to avoid payments to bondholders outside of Argentina. Argentina who has continuously defaulted on payments, have been unable to access international credit, and are currently unable to aid their failing economy. The country has been seeking alternatives and ways to make deals with the "holdout creditors", but any deal that can be passed, has to be approved by congress. Many Argentineans also do not like the idea of "rewarding the holdouts for their obstinacy", so it is interesting to see what will happen.
http://www.economist.com/news/finance-and-economics/21690109-government-has-struck-one-deal-holdout-creditors-others-will-be
What is the government's structure? What was the government spending all of the money on that failed to produce any returns?
ReplyDeleteWhat is the government's structure? What was the government spending all of the money on that failed to produce any returns?
ReplyDeleteI can't believe shareholders would swap their bonds for other secuirities at a 65% markdown. It is ridiculous to me that they defaulted on this amount of bonds.
ReplyDeleteI can't believe shareholders would swap their bonds for other secuirities at a 65% markdown. It is ridiculous to me that they defaulted on this amount of bonds.
ReplyDelete