3. Argentina can try to re-route the payments on restructured debt: To avoid making payments in US jurisdiction Argentina might consider offering performing debt holders payment of coupons into a new offshore trust.
Legally, this is complicated to the extent that one of the orders of the judge requires Argentina not to modify its payment mechanisms for Exchange Securities. Evidently Argentina, in exercise of sovereignty, may attempt to do so anyway. Yet financial institions under NY law that facilitate such a scheme might be liable to being labeled in contempt of court and therefore Argentina would rely on other institutions to help it carry out such a plan.
But in addition, a successful execution would require solving some operational unknowns. We have heard opinions from legal experts that payment to the Trust in NY is "hard-wired" into bond contracts. If so, to re-route payments offshore (outside US) Argentina may need to carry out an exchange with current restructured debt holders. Yet an offshore payment would sacrifice US legislation and—while it is clear investors have an incentive to facilitate the payment of their coupons—it is not clear if they would rush to embrace a different legislation. Argentina can argue that a full payment in USD in Argentina should be viewed as superior to risk of payments being pro-rata in NY. But following all the noise around risk of "pesofication" we doubt all investors dependant on the BoNY trust structure have the appetite to make the gamble. A foreign non-US jurisdiction (UK?) might offer a (temporary?) shelter to continue payments but 100% participation in a swap of this kind has slim chances.
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