BofA Says Argentine Default Definition Unclear for Bonds to CDS
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Determining whether Argentina’s failure to reach a settlement with holdout creditors tomorrow will trigger a default on bonds and credit-default swaps isn’t clear cut, according to Bank of America Corp.
Tomorrow will mark the end of a 30-day grace period after Argentina’s $539 million payment on foreign law and currency bonds was blocked by U.S. courts because the nation had violated an order to pay holders of defaulted bonds from 2001 at the same time. Since the money remains on deposit at an account with its bond trustee Bank of New York Mellon Corp., which is barred from disbursing the funds, there will need to be a distinction made between a failure to pay and a failure to receive, the bank wrote in a report today.