Last week I had a conversation with an Argentinian colleague over a cup of rooibos — since I could not offer her a cup of mate — about SA’s high debt-to-GDP ratio and the quasi-sovereign risk of Eskom’s R500bn debt. The discussion weaved between politics and what would happen if Eskom defaulted on its debt, triggering a cross-default event resulting in a sovereign default.  She reminded me of the 2001 Argentine sovereign debt default, the largest default in history. Unlike SA, which has about 90% of its sovereign debt with domestic lenders, Argentina’s creditors were predominantly foreign. Argentina and the rest of Latin America have arguably some of the greatest minds in economics, contributing tremendously to international multilateral institutions, regional institutions and many departments of economics the world over. This endowment put Argentina in a stronger negotiation position following its sovereign default. In the case of the 2001 Argentine default, international bondholde...

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