Edição Especial - Faap

Argentina’s debt exchange – a
new paradigm? A review of
systemic implications
Daniel Marx*
Abstract: Argentina sovereign debt exchange certainly caught any
observer’s attention because of its size, the implicit amount of
reduction involved and the scope of debt instrument included.
Circumstances have been changing slowly but steadily in a way that
several modalities that we had seen in the previous decades were no
longer practical. Because of that, the characteristics of the Argentine
exchange are indicative for some people of a change of paradigm. The
intention of this article is to focus on more systemic issues, relevant for
the analysis of the repercussions of this transaction. The first topic is
referred to the role of the international financing organizations. A
second issue is referred to the change in the definition of eligible debt.
A third systemic issue that is worthwhile revisiting is the understanding
of different creditor protection features. Sovereign defaulted debt
resolution process or the lack of it when bonded debt is prevalent is a
fourth issue to be discussed. Finally, another aspect that merits review
is the functioning of financial markets. The resulting challenge is how
to set up an agenda that incorporates the repercussions of
technological changes as well as international understandings in the
patterns of behavior that would reduce systemic risk.
Key words: Sovereign debt resolution, exchange, Argentina, systemic,
IMF, eligible debt, financial markets.
Argentina recently completed sovereign debt exchange certainly caught
any observer’s attention because of its size, the implicit amount of reduction
involved, the scope of debt instrument included, and other features that were
covered by the media.
My intention is to focus on more systemic issues, which I think are highly
relevant in the analysis of the repercussions of this same transaction. Several of
them indicate quite a departure from precedents observed over the last several
years. I would argue that, circumstances have been changing slowly but steadily
in a way that several modalities that we had seen in the previous decades were
no longer practical. Because of that, the characteristics of the Argentine
exchange are indicative for some people of a change of paradigm, but in fact,
* Daniel Marx is currently a partner of AGM, a Financial Advisory firm based in Argentina. From 1999
until early December, 2001 was Secretary of Finance of the Ministry of the Economy of Argentina
overseeing the Public Credit Office and the Financial Services Department. Before that, he was
Undersecretary and Chief Debt Negotiator for Argentina in charge of the Brady deal negotiations, the
reintroduction of Argentina into the Capital Markets and public sale of state companies being privatized.
Previously he was also Director of the Central Bank of Argentina.
Argentina’s debt exchange - new paradigm?..., Daniel Marx, p. 157-161
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