Argentina Default Means $29B in Potential Claims

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July 29 (Bloomberg) -- By defaulting tomorrow, Argentina may trigger bondholder claims of as much as $29 billion -- equal to all its foreign-currency reserves. Bloomberg’s Katia Porzecanski reports on “Bloomberg Surveillance.” (Source: Bloomberg)

Argentina says it is not just $1.3 billion.

There is a lot at stake where if they pay bthe holdouts that not except the terms of her structure, if they pay them, do they continue to pay all of the holdouts, which can amount to $15 billion, and then if they pay all of the holdouts, does that then pursue a barrage of lawsuits from all of these people who accepted the terms of the restructuring -- the supreme court has said yes come argentina, you have got to pay up, so it is the u.s. supreme court now versus argentina.

Well, they did not hear argentina's appeal.

They are out of legal recourse, now they are complying with a judge in new york.

Why do you not get the sense that argentina is desperate to avoid defaulting?

That is that is a good question.

They say this is not a default.

They say we deposit the money, a default is when you do nott deposit the money.

Jim grant is over here aging.

You have written about this, jim.

I first covered this during the bearings crisis in 1890. [laughter] katie was not there.

No, she was certainly not there.

Look around the world today.

People still invest a terrific amount of confidence in government that would seem not to be so terribly -- there is an iraq issue, the 545's, priced to yield about 7%. 7% is not just a fancy rate of interest when set against the prospect of the republic of iraq, so it is not just argentina that seems to be full of saying flaw about a default.

The world is easy at this point.

Katia, i look at the argentinian currency back 20 years or so.

It is a remarkable sequence of devaluations or depreciation.

What is argentina's hope here besides trying to get to the next world cup?

Well, they need to balance an economy and a sad situation, reserves that are dwindling, they are at $29 billion or so -- with that is far less than they were when they last defaulted.

It is far less from their peak in 2011, which was about $56 billion.

When they defaulted, it was a complete mess in 2001. everything was back.

These are not the same circumstances as they were then, but the economy is not in good shape.

They need to regain access to capital market.

They cannot keep going the way they are going.

The line on the commodity boom for all of their inflows, now they do not have it anymore, they are running out of money, and they need to gain assets to capital markets.

It is a tricky time to lay with fire.

Does elliott have any company, or is elliott all alone?

They are not alone.

Several other hedge funds are with them in this battle, and beyond them, there are a number of retail investors, italians that lost their savings in the default that are also suing in various different courts, including the world bank.

To what extent we look for this as to how now all international sovereign disputes will be settled?

It is difficult to look at this as a precedent because this is a very unique case.

He contracts that argentina sculpted and defaulted on our very unique.

They are old-fashioned and not really in existence anymore.

In terms of the interpretation of the court, that is fairly unique, experts say.

In terms of creditors' rights, this could be precedent setting.

Katia porzecanski, thank you for joining us.

You can read her article on bloomberg.com, get up to speed.

This text has been automatically generated. It may not be 100% accurate.

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