"In December 2001, after four years of deepening recession and mounting social unrest, Argentina's government collapsed and ceased all debt payments. Argentina has failed to pay before, but this time it registered the largest sovereign default in history. Argentina must restructure over $100 billion owed to domestic and foreign bondholders, including $10 billion held by U.S. investors. A final offer made in June 2004 amounted to a 75% reduction in the net present value of this debt, and although an improved offer is expected by year-end, it is still the largest proposed write-down in the history of sovereign restructurings, which foreign bondholders have rejected. Regardless of how Argentina's debt is finally resolved, it will likely represent an unprecedented loss for bondholders. This will have widespread repercussions not only for creditors, but for Argentina's long-term financial sustainability, developing country debt markets, guidelines for future sovereign debt restructurings, and the International Monetary Fund (IMF). All of these issues have been the subject of congressional hearings focused on evaluating the causes and ongoing repercussions of Argentina's financial crisis."
CRS Report for Congress, RL32637
U.S. Department of State: http://www.state.gov/