ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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A Sovereign Debt Story

Republic of Argentina vs NML Capital

A Sovereign Debt Story

A series of events since the early 1980s have pushed developing countries to restructure their economies and integrate themselves with global markets. These policy shifts have made them highly vulnerable to external changes. One such story is that of Argentina which from the mid-1970s has gone from crisis to crisis and is now facing legal pressure from US holders of old Argentine debt.

Argentina got a skeptical reception at the United States (US) Supreme Court as the justices considered whether two banks must turn over details about the country’s assets as part of a multibillion dollar fight over defaulted government bonds”, reported Bloomberg on 21 April 2014. On that day, the US Supreme Court justices heard the arguments of Argentina and owners of the defaulted bonds led by NML Capital − a Cayman Islands-based unit of billionaire hedge fund manager Paul Singer’s Elliott Management Corporation. The justices are expected to rule by late June or early July. This case is one of the many cases before the US Supreme Court in which Argentina is one of the parties. It is regarding the information NML is seeking from Bank of America and Banco de la Nacion Argentina about assets held by Argentina and its officials worldwide.

Although this case is about the historic Argentine default of 2001, the beginning of the debt accumulation that led to this default may be traced back to the “National Reorganization Process” (NRP) of the military dictatorship from 1976 to 1983. The NRP was the Argentine version of the familiar reorganisations of social life into a free market around the globe since the early 1970s and is similar in nature to the reorganisation of Chile from 1973 to 1990 or Turkey from 1980 to 1983 by their respective military dictatorships.

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