Market history · Sovereign credit ·
Argentina defaults again, then restructures $65 billion
Argentina missed a bond interest payment due on 22 May 2020 and entered default, its ninth. CNBC reported that talks with creditors hit an impasse in June, before the government and its main bondholder groups reached a deal on 4 August to restructure about $65 billion of debt, and bonds rallied on the news.
The country had been struggling with a recession, high inflation and a heavy debt burden before the pandemic. The restructuring reduced the interest payments and extended maturities on the bonds, with creditors accepting losses in return for a path to resumption of payments.
Argentine bonds remained volatile in the years that followed.
The takeaway
In sovereign defaults, the restructuring terms decide the loss. Prices can recover on a deal while still reflecting a long wait.
Sources
This is a retrospective about a past event, provided for general information. It is not investment advice, does not describe RockLake's positioning at the time, and past performance is not a guide to future performance. Read the risk warning.