David J. Fernandez, shareholder in the firm’s Public Finance Section, was quoted in an article in the Business Insider about the possible “acceleration” of Argentina’s default – an option that would allow bondholders to immediately call in their full debt. The country went into default in the summer for refusing to pay a group of bondholders. Since then, there has been a stalemate between the country and its creditors.
If all the bondholders agree to accelerate, the amount demanded of Argentina will be far more than what it can pay. If none of the bondholders agree to accelerate, the stalemate will continue. There is also the possibility that only some of the bondholders will agree to accelerate.
“That's actually a win situation for Argentina,” explains Fernandez. “There is a strategy there that could force a settlement.”
“Here you're talking about a sovereign nation that definitely has assets, so right now you have a stalemate created by the circumstance,” he continues. “This gives you the possibility of other bondholders coming in and assuming a position of authority and direction...then Argentina can still stand there on the sidelines and wave their hands and say it's unfair but also look they accomplished something without doing anything.”
Read the full article – “The Hot New Threat To Argentina — 'Acceleration'” (Business Insider, October 31, 2014)