Argentina Seeks to Resolve Defaulted Debt Issues, While “Vulture Funds” Are Determined to Undermine Process

The

Argentine government recently announced a plan to offer a debt swap to

investors still holding US$20 billion (plus interest) in unpaid bonds

from the country’s 2001 debt default. Economy Minister Amado Boudou

stated on November 7 that a proposal would be made within 30 days,

which, once accepted, will likely enable the Argentine government to

begin to access vital international capital markets of which it has

been excluded since that year. While three banks, Barclays, Citigroup,

and Deutsche Bank, representing roughly US$10 billion of the remaining

defaulted bondholders, appear ready to accept this deal, a group of

“vulture funds” continues to render negotiations difficult by pushing

to receive the full face value of the bonds that they bought on

secondary markets for pennies on the dollar. These organizations, the

majority of which are based offshore the U.S. beyond effective

regulation and taxation, have been using U.S. courts and unremitting

Congressional pressure to compel the Argentine government to pay the

full face value of these bonds. In this struggle, the “vulture funds”

have found Congressman Eric Massa (D-NY) to be of inestimable value.

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This analysis was prepared by COHA Director Larry Birns and COHA Research Associate Nicholas Maliska

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