Argentina is set to default in less than two weeks unless it reaches a deal with holders of defaulted bonds or U.S. courts grant a delay to allow the nation to continue servicing restructured bonds, Bloomberg reported yesterday. U.S. Judge Thomas Griesa blocked the country’s attempt to make a June 30 bond payment, saying that it must also comply with an order to pay $1.5 billion to hedge funds and other holders of defaulted bonds that sued for full repayment. As the 30-day grace period winds down, the three possible outcomes are: (1) Argentina and holdout creditors reach a deal by July 30; (2) the court issues a stay on the ruling as negotiations continue; or (3) Argentina cannot reach a deal and the court does not grant a stay. If Argentina defaults, economic growth will slow and dollar outflows will rise.
