Bulltick Reaserch // Indeed, performing Argentina bonds collapsed after the decision, falling 8 – 10 points with the Discounts feeling the brunt of the pressure (declining 9% in price to trade at nearly 12% yield on the day).

Supreme Court Decision to Reject Argentina Appeal Makes Missed Interest Payments a Higher Probability Event

The US Supreme Court rejected Argentina’s appeal to have a lower court decision with regard to payment of the
holdouts reviewed. After this decision by the Supreme Court, Argentina is obligated to pay the holdouts in full
before it makes payments on performing (restructured) debt. That includes the interest payment coming up on
June 30th on the 2033 Discount bonds, which is clearly put at risk. Indeed, performing Argentina bonds collapsed 
after the decision, falling 8 – 10 points with the Discounts feeling the brunt of the pressure (declining 9% in price to 
trade at nearly 12% yield on the day).

The options are for Argentina now are pretty clear:
1) Comply. Argentina could pay as ordered (both performing and holdouts), the problem is the capacity to
do so, which authorities say is not there and indeed has been compromised by dropping reserves.
2) Settle. Argentina could attempt to negotiate with the holdouts before defaulting, something hinted at as a
possibility. However, this too is complicated by “pari-passu”, barring Argentina from offering better terms
to the holdouts as to the holders of performing debt.
3) Swap to Argentine law. “Plan B” as we have seen it would be to attempt a debt swap for holders of
performing debt, so that investors can receive mirror bonds but under Buenos Aires legislation and
thereby receive payment. This scenario is also complicated by the execution of this strategy from a
logistical point of view. Further, the capacity of provinces and corporates to issue under New York law
could be compromised.
4) Default. Argentina could not pay the upcoming interest payments on performing debt, which may occur
due to lack of time before the June 30th
 interest payment to settle with holdouts or swap to Argentine
law. The total interest payment due on June 30th
 including USD, Euro, and JPY-denominated Discount
2033s we calculate at USD $816.84 million.