Last week, the U.S. Supreme Court declined to hear the appeal from Argentina, which has been embroiled in legal disputes with lenders since the country defaulted on its debt in 2001. After restructuring its sovereign debt in order to escape recession, Argentina offered previous creditors an exchange for new debt that gave only 25 cents on the dollar.
More than 90 percent of the country's bondholders took the deal, though some American hedge funds held out and have sued in court for full payment.
Argentine President Cristina Fernandez de Kirchner has repeatedly decried the litigious creditors as "vulture funds" and warns that a full payment could push the nation toward another default.
But enforcing contracts made by sovereign lenders is important to maintaining functional and reliable credit markets. If Kirchner would like to renege on her promises to American investors, then the country shouldn't be allowed a place in U.S. markets until it is ready to operate in good faith.
Editorial on 06/21/2014