Argentina debt swaps may pay US$1.4 billion after default

Investors holding debt protection for Argentina could be in line to share compensation of about US$1.4 billion after last month's default on foreign debt – the ninth time in the country's history.

Firms holding the country’s credit-default swaps will receive about 66 percent of the amount covered by the instruments, according to the initial results of an auction to settle the contracts on Friday. They get triggered when a borrower fails to pay its debt. Investors use the instruments to make negative bets on borrowers or as hedges for bond investments.

Argentina, which has a long history of defaults, is negotiating a US$65 billion debt restructuring on its foreign debt. The latest deadline from President Alberto Fernández’s government expires this evening. Given that the nation is already in default, there are no major implications for an additional extension.

Some of Argentina’s largest creditors include Pacific Investment Management Co., Franklin Templeton, BlackRock Inc. and Ashmore Group Plc, according to data compiled by Bloomberg.