February 27, 2015
A NYT piece on the ongoing legal battle between hedge funds that own a portion of Argentina’s debt and the Argentine government likely misled many readers. It referred to the hedge funds as “holdouts,” saying that they had refused to accept the terms offered by Argentina to bondholders at the time the country defaulted in 2001.
In fact, these funds did not hold Argentine debt at the time of the default. They bought the debt up after the default at a small fraction of its face value. Their hope was that they could use their political connections and their legal expertise to force the Argentine government to pay substantially more on its debt than it offered to other creditors.
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