Will the Argentine debt restructuring lead to changes being made to the documentation of credit derivative contracts relating to the emerging markets - and, in particular, emerging-market sovereign debt?
The possibility, which is being reviewed by a specially formed emerging-markets subcommittee of the International Swaps&Derivatives Association (ISDA), has been thrust into the spotlight by three lawsuits involving JPMorgan.
The investment bank - the largest user of the credit derivatives market, as a major buyer and seller of protection and also the leading intermediary - is involved in three legal disputes relating to Argentina's $50 billion debt exchange last November.
On the surface, the bank appears to be adopting a simultaneously opposing stance as to whether the debt restructuring - which constituted a voluntary exchange - did or did not represent a credit event triggering the delivery of protection on credit default swaps.
On the one hand JPMorgan says the restructuring was not a credit event. As a result, the bank is being sued by two hedge funds - HBK Master Fund and Eternity Global Master Fund - which had bought protection that they claim should have been paid.