Argentina Default Plan Burns Traders Who Trusted Local Debt
- Government will halt payments on dollar-denominated local debt
- Government has kept up payments on foreign-law obligations
People line up for Banco de la Nacion in front of a Coronavirus sign in Buenos Aires, Argentina, on Friday, April 3, 2020.
Photographer: Sarah Pabst/BloombergIn Argentine trading circles, a consensus had emerged of late that the government was likely to treat some local creditors the same way it would treat those who own its foreign bonds when widely anticipated restructuring talks finally got underway.
In fact, dollar-denominated bonds issued in the local market were trading just a few weeks ago at almost the exact same price as dollar bonds issued overseas -- 28 cents on the dollar, give or take. Late Sunday night, that consensus was blown up when the government unveiled plans to stop payments on local dollar debt. Now, overseas notes trade at about a 6-cent premium to domestic securities.