Class action threat recedes as Argentina completes debt swap

Author: | Published: 1 Apr 2005

As Argentina celebrates closing the largest debt exchange offer in history this month, a cloud of creditor lawsuits lurks on its horizon. But it is a cloud that is likely to herald a less dramatic storm than many had predicted.

In January Argentina, owing more than $100 billion to hundreds of thousands of investors around the world, offered to pay its creditors roughly 30 cents for each dollar due to them. Seventy-six percent of the bondholders agreed to Argentina's terms, resigning themselves to the fact that the government either could not or would not pay more. But the remaining creditors, representing almost $25 billion in outstanding debt, have been left with a choice: cave in to the offer, or try to force Argentina to pay more.

With Argentina apparently unwilling to negotiate, the most obvious route open for these creditors to reach their money has been through the courts. $25 billion is...