What price par value?
Adam Lerrick has promised the retail investors who sign up for his scheme that he will get them their money back: that although their coupons might drop and their maturities might be pushed back, the face value of their bonds will be preserved.
But there's a problem. As Brad Setser, an expert on sovereign debt restructuring at the Council on Foreign Relations in New York, says: "For all his fine words about preserving par value, he didn't base his compensation structure on preserving par value." Lerrick gets paid according to the trading value of the bonds that his investors will end up with, not according to their par value. Institutional investors who mark to market want to maximize trading value, while retail investors who hold bonds to maturity are more interested in par value: that is, they don't discount their future principal repayment at the kind of interest rates that the markets do.
There are some good reasons why bonds that preserve par value might be worth less in trading terms, and why Argentina might want to avoid repaying investors in full. For one thing, preserving par value means a higher debt-to-GDP ratio for Argentina, and therefore makes it more difficult to raise new money.