Ten years later, Argentina is still haunted by the devastating default of 2001-2002.
An Argentine navy ship crewed by more than 200 sailors has been seized by a court in Ghana at the request of investors who lost out when Argentina defaulted on its loans in 2001.
The ARA Libertad, a training ship on a tour of Africa, was prevented from leaving Ghana by court order on Wednesday following an application by NML Capital, a subsidiary of U.S. hedge fund Elliot Capital Management, the Financial Times reports. The hedge fund, founded and run by the U.S. billionaire Paul Singer, is one of Argentina's former creditors.
A painful recession in the late 1990s pushed the Argentinean government toward running increasingly unsustainable fiscal deficits. By 2001, the country was landed with a crippling level of sovereign debt.
Argentina defaulted on more than $100 billion of debt in 2001 and 2002, the biggest default in history. The majority of those loans were restructured in 2005 and 2010, giving creditors around 30 percent of their money back.
The South American country faces numerous lawsuits in U.S. courts by bondholders who want to recover the full value of the defaulted bonds. Creditors have sought to freeze Argentine state assets from aircraft owned by flagship airline Aerolineas Argentinas to central bank funds deposited in banks in New York, according to Bloomberg.
Argentina’s foreign ministry condemned the move as a “stunt” pulled by “vulture funds” and said it had contacted Ghanaian authorities in order to free the ship.
"The vulture funds have crossed a new line in their attacks on Argentina," a Foreign Ministry statement said. "The Foreign Ministry has already approached the African nation to clarify the stunt pulled by the unscrupulous financiers."
A navy source told Reuters that the Libertad would only be able to set sail if Ghanaian courts lifted the order.
Beginning in 2003, NML filed 11 actions in federal court seeking to collect on its defaulted Argentine bonds. NML has won five money judgments in its favor totaling $1.6 billion. However, Argentina is not willing to make further offers.
The Libertad, built in 1956, has been estimated to value at between $10 million and $15 million. The ship left Buenos Aires on June 2 on a graduation tour and was due to sail for Angola from Ghana.