Something slightly strange will happen at the US Supreme Court today. It’s the deadline for amicus briefs in support of Argentina’s request to overturn lower court rulings that would force the country to service parts of the debt on which it defaulted in 2001. The strange thing is that governments to which Argentina owes money—and which are deeply frustrated with the country’s scofflaw ways—are likely to be among those filing briefs in its support.
They have good reason. If the Supreme Court rules against Argentina, it will effectively undo the settled conventions by which we restructure the debts of financially-distressed sovereigns. Every sovereign-debt restructuring negotiated in the past decade could be reopened.
Argentina’s $130 billion default was massive. It covered nearly 15% of all emerging-market debt then outstanding. Foreign-law bonds made up about $80 billion of the debt that went into default; those bonds issued under New York law are…
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