Argentina's Congress passed a new bill in September 2014, which the government hopes will allow it to make debt payments to bondholders in defiance of a controversial US court ruling, which pushed the country back into default. President Cristina Fernandez de Kirchner's government has to make a $200m coupon payment in Paris by September 30, 2014 to stop the default spreading across bond series. If that were to happen, it could prompt investors to call for immediate payment on the principal value of their bonds.

However, the government must route the funds through channels beyond the reach of the US judge, Thomas Griesa, who ruled in July that Argentina has to settle a legal fight with a group of New York hedge funds over unpaid debt from a massive $100bn default in 2002, before servicing its performing debt.

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The new Argentinian legislation creates a local trustee – Banco Nacion – and opens an account at it where the sovereign will deposit exchange bonds services from now on, starting with the September 30 interest payment. In a complicated process, for exchange bondholders to access cash deposited in the account, the trust indenture must be amended or exchange bonds have to be swapped into ‘new’ exchange bonds. In addition, the legislation allows the authorities to swap – if necessary – the exchange bonds into ‘new’ exchange bonds under local or French law and to avoid Mr Griesa’s injunctions.

FDI in Argentina increased to $855.43m in the second quarter this year from $239.28m in the first quarter. However, this modest gain is less impressive when put into context. Colombia, which has a similar sized economy as Argentina at about $400bn, received $3.4bn in the first quarter this year and $3.9bn in the fourth quarter last year. International investors are highly cautious about investing in Argentina.

Alberto Ramos, Argentina analyst at Goldman Sachs, says: “The country receives very limited FDI and way below its potential. One of the main problems is capital controls, which mean that investors are not able to repatriate their profits fully. That really puts investors off the country.”

Argentina has presidential elections in October next year, with the new president sworn into office in January 2016. Ms Kirchner – who only has an approval rating of about 27% – cannot stand for re-election under the Argentine constitution, and all the main presidential candidates are more free market orientated than her.