Argentina Faces the Prospect of Bankruptcy Beyond 2015

Argentina may be on a path to bankruptcy. On Sept. 29, a U.S. federal court found the Argentine government in contempt for trying to reissue and relocate the debt dating from its default of $132 billion in late 2001. The latest tactic in a long-running battle that has played out in U.S. courts would have kept Buenos Aires from having to repay its holdout and hedge fund bondholders — those who had refused to participate in a negotiated settlement of the debt and sued — upfront and in full. The ruling will have little effect on Argentina in the short term, but as 2015 approaches, Buenos Aires will either remain in default or be forced to settle its outstanding debts, something the government does not have enough money to do.