In 2001, Argentina defaulted on more than ninety-five billion dollars in external debt. At the time, this constituted the largest sovereign default in history. Argentina initiated two restructurings in 2005 and 2010, allowing holders of defaulted bonds to exchange their bonds for new debt at a rate of twenty-five to twenty-nine cents on the dollar, thus restructuring more than ninety-one percent of the foreign debt on which it had defaulted in 2001. Hedge funds specializing in trading distressed sovereign debt, such as Elliott Associates, purchased large amounts of Argentinian debt at a significant discount on the secondary market, and “held out”—they refused to join the restructurings and sought full collection of their debt.
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