Argentine Corporate Defaults Pile Up: Shock Therapy (Correct)

Cracks are starting to appear as Javier Milei removes the distortions that once characterized the Argentine economy, hurting companies that bulked up on debt by exploiting exchange rate gaps.

The Argentine president in the past 16-plus months implemented sweeping changes, enforcing cuts to public works and generous subsidies for utilities. He most recently removed the currency controls that governed the peso for years.

Companies took advantage of the currency controls that created a gap in exchange rates by importing goods at the stronger official rate and selling them in pesos linked to a weaker parallel rate. Companies were also able ...