At the end of July Argentina defaulted on some of its bonds for the second time in 13 years. There had been some media speculation that a deal with private banks might be put together to resolve the problem. But the NY Times runs this update article indicated that has failed.
It is hard to tell how this story is going to end. Argentina refuses to budge so far and the bond holders are not willing to accept any compromise deals that have been presented to them.
Below are some quotes from the article. We will have to see if any derivatives problems surface from this situation the longer it goes unresolved.
"Aurelius Capital Management, one of the hedge funds that has battled with Argentina over billions of dollars in bond payments, said on Wednesday that efforts to reach a deal with private parties in the wake of the country’s default had collapsed."
"In addition to “exhaustive efforts” to settle with the Latin American country, Aurelius said it had engaged in talks with private parties to find a solution to help end Argentina’s current sovereign debt crisis."
“No proposal we received was remotely acceptable,” Aurelius said in a statement on Wednesday afternoon.
"Argentina and the holdouts engaged in talks to try to come to a settlement before a deadline of July 30 for making a payment on the discounted bonds. But the talks failed, and Argentina defaulted for the second time in 13 years."