Default risk: Argentina offers conditions for debt swap

NEW YORK: Argentina on Friday offered two New York hedge funds to repay its debt to them with cash and new bonds on conditions similar to those used in a 2010 debt swap. The South American nation is facing a court order to pay out $1.3 billion to bondholders on debt it defaulted on during its 2001 financial crisis. The offer would repay the investors around 70% of their capital in nominal terms as the bonds mature in the next 28 to 33 years. Those terms were already accepted by holders of 92% of the bonds but have been rejected by the holdouts. If Argentina’s latest offer is rejected, the government would be forced to repay the hedge funds in full now. But because of equal treatment clauses in the restructured bond contracts, the country could be forced to pay back all others at the same time, possibly forcing it to default on all its debt.

Published in The Express Tribune, March 31^st, 2013.

Like Business on Facebook to stay informed and join in the conversation.