Argentina’s Defiance in Debt Swap Dims Market Redemption
This article is for subscribers only.
Argentina’s attempt to circumvent a U.S. court order to pay its overseas bondholders is threatening to prolong the nation’s isolation from international markets and sink its economy deeper into recession.
President Cristina Fernandez de Kirchner said on Aug. 19 that Argentina will let holders of foreign-currency bonds swap into new securities governed under local law after a U.S. ruling blocked payments and triggered its second default in 13 years. The plan comes in direct conflict with orders from U.S. District Judge Thomas Griesa, who ruled that Argentina must first resolve unpaid debts from its 2001 default before it can make any other payments and said such a swap would be illegal.