December 11, 2013
Congress gives go-ahead to open-ended debt swap
The Congress approved late last night a debt swap offering an unlimited time window for the remaining 7 percent of investors to restructure bonds left over from the country's 2002 default.
Not all of the remaining holders will participate in the swap and opinion is divided on whether the legal showdown, which could end up before the US Supreme Court, threatens to undermine future restructurings worldwide.
The terms of the swap are in line with Argentina's 2010 restructuring offer. In that and a previous 2005 debt exchange, 93 percent of holders swapped their defaulted bonds for new paper offering less than 30 cents on the dollar.
The 2005 and 2010 restructurings offered limited time periods for participation, a point that US judges have complained about as they deliberate what to do with "holdout" investors suing for 100 cents on the dollar.
A US federal court judge has ordered Argentina to pay $1.33 billion to the holdouts. Argentina is appealing and the US Supreme Court will meet behind closed doors on September 30 to decide whether to hear the case.