Sober Look 08/04/2014
Q: Is Argentina officially in default?
A: (Yes), at least as far as S&P is concerned (classified as “selective default”).
Q: Does Argentina recognize that it is in default?
A: No. The Economy Minister Kicillof made it clear that as far as Argentina’s government is concerned there is no default because it has and will continue to make deposits with BNY Mellon (the trustee) to pay the coupon. …
Q: Has the sovereign CDS (credit default swap) been “triggered” (have we had an “event of default”)?
A: It is likely that we do indeed have an event of default under the ISDA guidelines. … Ultimately it will be the ISDA Determination Committee that will make that call. (They have a strong bias against declaring defaults.)
Q: Can a settlement still be reached?
A: Yes. (But) a number of analysts are suggesting that a settlement will not take place until at least early 2015.
Q: What are the economic consequences of Argentina not settling this by year-end or beyond?
A: The consequences could be quite grim. As it is, the Argentina’s GDP is contracting again.
(See the complete list of Qs and As)