The nation of Argentina was declared in default on billions of dollars of foreign-currency obligations today, as they were unable to reach deal with American investors on a missed interest payment. This is the second time in 13 years, the country has gone into default.
According to the ratings agency Standard and Poor's Argentina has about about $200 billion in foreign-currency debt, including $30 billion of restructured bonds.
As Quartz explains, Argentina has spent most of the last decade restructuring its debt, following a 2001 default, but a small group of investors, led by New York-based hedge funds are demanding full repayment of that debt. The creditors won a judgement requiring Argentina to pay them $1.5 billion, but the Argentina's Economy Minister, Axel Kicillof, says paying that debt "would trigger bond clauses requiring the country to offer similar terms to other bondholders." However, a U.S. judge ruled that they can't not make a required $539 payment to those other bondholders, unless they also payout the money owed to the hedge funds. So nobody got paid anything, and South America's third-largest economy is now in (probably) in default.
The situation could be temporary, as they could still negotiate a settlement over the $1.5 billion payment. However, Kicillof has been unable to work out a deal through a court appointed mediator. Negotiations will continue over the next several days, though Argentina's president Cristina Kirchner has made it a political point of pride to not pay the "vulture funds" what the courts say they are owed.
Argentina also maintains that they are not in default, because the $539 million interest payment was delivered to an escrow account. However, that money has not been distributed to creditors.