The New Squeeze on Argentina

The New Squeeze on Argentina

It is difficult not to sympathize with the government of Argentina. It says it does not wish to default on its debt, but it is being squeezed by two sets of forces: Argentine domestic law and the overwhelming majority of its creditors on one hand, and a New York court and a small group of creditors that refuse to negotiate what they are owed on the other. Another default looks more likely each day. In 2001, Buenos Aires defaulted on about $100 billion of its debt, at that time the largest sovereign debt default in history. Over a period of several years, it negotiated with holders of the original securities and agreed to swap the old bonds for new ones worth about 33 cents on the dollar.

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