Argentina is facing a technical default at month-end because it’s been virtually barred from using the US financial system to pay current bondholders until holdouts from the 2001 default are paid.
A bond payment is due on July 30 and now Argentine officials are looking for more time. A lawyer for Argentina says a deal by month-end is impossible, even with round-the-clock talks.
That’s exactly the kind of thing a lawyer that bills by the hour would say but this is a high-stakes operation. Argentina has been a perpetual basketcase but troubles there helped to disrupt broader markets in February and a technical default would threaten the same.
On problem paying the holdouts is that it would trigger a clawback clause in current bonds. That clause expires at year end and Argentina will try to buy time until at least then.
