Argentina has embarked on the biggest bond default in
history, and for all the country's attempts to do so in a
transparent and orderly manner, the process is not looking very
pretty so far.
A comprehensive Argentine debt restructuring has been a question of
when rather than whether for some months. And as far as rating
agency Standard&Poor's is concerned, at least, the key date was
November 6. That was when the sovereign announced that it was going
to swap its outstanding bonds for new loans, issued under Argentine
law and collateralized by tax receipts. The new loans have lower
coupons than the bonds, are illiquid, and have extended maturities,
although the principal is unchanged. Domestic investors don't want
to take a capital loss.
Even though the exchange is voluntary, S&P considers that its
very existence constitutes a default. David Beers, S&P's head
of sovereign ratings, says: "If...
