Argentina was hoping to have some powerful allies in its courtroom showdown with holdout creditors such as Elliot Capital Management, a New York-based hedge fund that was notably responsible for impounding an Argentine tall ship off the coast of Ghana late last year. But now both the US Treasury and the IMF are backing away from earlier plans to file amicus briefs when the case goes to the US Supreme Court.The US government, which appears to have been responsible for the IMF’s last minute change of heart, isn’t explaining why it is backing away from a case that some said could imperil the entire global marketplace for sovereign debt. But it may be that officials are buying at least some of the arguments made by creditors that this case is too unusual to have the huge knock-on consequences once expected, or in fact that the knock-on effects might run the other way:
In another letter, Gibson Dunn, the law firm representing Elliott, said any attempt to call IMF intervention neutral was “simply disingenuous”. It said the move would encourage more countries to litigate and ultimately lead to “fewer rather than more successful consensual restructurings”.
So as the courts close in, Argentina faces the prospect of defaulting yet again on its international debt even as the national statistics office releases bullish information pointing to a surging economy.