The chances of an eventual deal with creditors have risen in recent daysMay 23rd 2020BUENOS AIRESSHORTLY AFTER coming to power in December last year
SHORTLY AFTER coming to power in December last year, Alberto Fernández, Argentina’s president, said the country was in “virtual default”. With the economy shrinking, the currency tumbling and poverty rising, the country’s debts had become impossible to sustain. In April his government delayed payments on dollar liabilities issued under Argentine law. And on May 22nd the republic missed a deadline to pay $503m in interest on dollar bonds issued under New York law. It marked Argentina’s ninth default since independence in 1816. The virtual became real.
In principle, bondholders could now band together to demand immediate repayment of the remaining money they are owed. They could also pursue Argentina in the courts. After Argentina’s seventh default in 2001, the legal chase lasted 15 years and covered some unlikely terrain, including the seizure of a 100-metre (330-foot) Argentine naval vessel docked in the Ghanaian port of Tema.
But the government seems confident that its latest default will prove brief and “soft”. Its efforts to persuade creditors to swap their bonds for new, less onerous securities would continue until June 2nd, it announced. “The question is not if we get a deal, but when,” said one source close to the president. “Call this an impasse, a soft…