Argentina 85-Cent Defaulted Bonds Show There’s Still Hope
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Typically when a country defaults, its debt sinks to less than 30 cents on the dollar. In Argentina, even after two days of losses, government bonds are trading above 80 cents.
Why are investors so confident? While missing a deadline to pay $539 million in interest due on July 30, Argentina still has sufficient funds and the willingness to make good on its obligations, according to Moody’s Investors Service. Unlike in 2001, when Argentina defaulted on $95 billion of debt, holders see little chance of losing 70 percent of face value as they did in the government’s last restructuring.