Argentina’s 12-year dispute with a group of hedge funds holding out for full payment on defaulted Argentine bonds is proving to be one of the most wasteful debt restructurings in history.
During the past few years an unedifying legal battle waged in New York courtrooms has steadily unpicked the restructurings that allowed Argentina to pick up the pieces after its $95bn default in 2001. Basing their rulings on a tight definition of the so-called pari passu clause that guarantees equal treatment for bondholders, US judges have declared it illegal for Argentina to make payments to the holders of restructured bonds unless it includes full payments to holdouts too.
This week, the unresolved dispute reached its doleful climax. Unwilling to bow to the demands of the holdouts, and consequently unable to keep the restructured bonds current either, Buenos Aires threw up its hands and gave up on its attempts to pay its creditors under US law.