A few holdout investors refused to concede

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Argentina is in the midst of a continuing saga regarding its default on its sovereign debt a case that the US Supreme Court will decide soon. HBS finance professor Laura Alfaro who served from to as Minister of National Planning and Economic Policy in her native Costa Rica recommends a course of action sure to anger banks and fund managers absolute sovereign immunity which is the way things were done before.

Argentina s escalating financial crisis is taking on the look and feel of when it defaulted on billion worth of sovereign bonds a move that triggered economic chaos in that nation. Along with Argentina s current struggles—the sharp devaluation of its currency rampant inflation and civil unrest—past financial problems remain unresolved and much on the minds Chinese Overseas America Number Data of its creditors a few of whom have not yet been repaid from the default. Back then Argentina tried to fend off creditors by adopting a hard line attitude about reducing its debt obligations. When it initiated a bond exchange offer in and told its creditors to take it or leave it the republic triggered a hornet s nest of reaction that ended up in the federal court in New York City. Argentina categorically refused to negotiate with investors and halted payments to any creditor that rejected its offer.





Investors who agreed to the exchange offer received new bonds worth percent less than the value of their initial investment a harsh haircut compared to consensual sovereign bond restructurings. and sued. These so called vulture investors hedge funds that bought the defaulted loans at deeply reduced prices and then sued Argentina for the full amount have been willing to stay in the fight for the long haul. The legal battle will culminate in the United States Supreme Court with a ruling expected in June. Not Setting Precedent While most observers remain focused on the outcome of the Argentina case the bigger question is what impact the case will have on the sovereign debt market and on future restructurings in general.