Argentina’s default yesterday is not good news for its bondholders, and it might not be good news for those betting it would happen, either.
There are some $20.7 billion in outstanding credit default swaps on Argentine sovereign debt, according to the Depository Trust & Clearing Co. But even though the country failed to make its $539 million debt payment by yesterday’s deadline—after failing to reach accord with hedge-fund holdouts from is last default 13 years ago—hedge funds expecting the default might not get paid for some time, if at all.
Standard & Poor’s Ratings Service has declared Argentina in default. But the CDS won’t pay out unless the International Swaps and Derivatives Association concurs. A ruling could come within a few days.