Argentina Argentina what a beautiful country but what a terrible debt history it became to be.

More seriously as many know Argentina has a long tradition of defaulting government bonds since its declared independence of 1810 with the very first default from a bond issued in 1824. But in roughly 180 years of independence the 2002 default is the debt that catches international attention since 2012. Restructured in 2005 and then again in 2010 many investors are now interested in the battle between the notorious hedge fund “Elliot Management Corporation” and the government of Argentina. I am personally interested by the outcome of this battle because this fight illustrates an absurd case of an American juridical ruling overriding sovereign immunity. Equally interesting are the creative resolutions often gained by such encounters.

From where I stand this is viewed as an illustrative use of American financial weaponry. As the dollar is the most widely currency used within the financial market without this denomination any firm or nation is seriously compromised towards market access. Nationally attested within Switzerland, the US pressure may fold any initial reluctance against its will by the use of such means. Argentina highlights this pressure to absurdity by “attacking” via a private firm using juridical ruling. By following the chain of events we observe Argentina desire to “cut loose” from the dollar leading to less attractive national denominated bonds but with great cost. Financial firm need dollar denominated currencies to offer attractive financial products, without it the liquidity of your product is severely compromised.

For the most part the fight is still on and no resolution has been yet to be found. Argentina was hiding behind a RUFO clause that expired last year and Judge Griesa seems immutable to compromise. What is interesting though is that President Kirchner second term will be over this year leading to new management. I wouldn’t be surprised that people within Elliot Management Corporation “think tank” did not leave this to contingency.

Works Cited

• BRONSTEIN, H. Argentina in no rush to re-start debt restructuring talks. Reuters.
• EIGHT time unlucky. The Economist
• AX, N. R. A. J. U.S judge calls Argentina debt swap plan “illegal”. Reuters.
• CHARLIE DEVEREUX, C. R. Argentine Default’s Biggest Losers are short 4$ Billion. Bloomberg.
• FERNHOLZ, T. Is it the US government’s fault if an American judge made Argentina default ? www.qz.com.
• RASZEWSKI, N. M. A. E. Argentina’s debt crisis seen rumbling on until 2015 election. Reuters.
• KELLY, K. Argentina, Elliott may finally end bond war. CNBC
• PORZECANSKI, K. Argentina Bondholders Keep Faith as Group Seeks to Waive Clause. Bloomberg.