Settling Sovereign Debt's "Trial of the Century"

With NML v. Argentina finally poised for settlement negotiations, the authors analyze a subset of the key economic and legal factors underlying this litigation, with a particular emphasis on issues relevant to a potential settlement. This Article documents the wide heterogeneity of holdout rates across Argentina's 150 defaulted bonds and focus the analysis on the seven most held-out bonds. This Article also assesses the returns that investors would have obtained by purchasing the seven-bond basket at different times since 2002. This analysis offers a framework for potential settlement negotiations.

However, with so many holdouts unaccounted for, a settlement with the NML litigants exposes Argentina to the tyranny of the next litigant as long as the current injunctions remain in place. There is a benefit of modifying or lifting these injunctions as Argentina begins negotiating in good faith to reach a reasonable settlement with its holdout creditors.