Thursday, July 31, 2014

How Argentina’s Default May Trigger $29 Billion in Claims

http://www.bloomberg.com/news/2014-07-29/how-argentina-s-default-may-trigger-29-billion-in-claims.html

Couple of worthy points in this article.

  • By defaulting tomorrow, Argentina may trigger bondholder claims of as much as $29 billion -- equal to all its foreign-currency reserves. 
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  • Based on the cross-default clauses, Argentina would have to pay back the entire balance -- plus unpaid interest -- of any security if holders of at least 25 percent of that debt demand that their money be returned.
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  • In a meeting last week with Pollack, Argentina called on the judge to create a safeguard against risks related to the RUFO clause, which the country has said may trigger claims of more than $120 billion. Griesa has rejected Argentina’s repeated pleas for a delay.  
  • Credit-default swaps that protect against losses from an Argentine default over the next three months imply a 43 percent chance of non-payment, according to data compiled by CMA. The South American nation’s debt is the most expensive in the world to protect with the swaps. 



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