What the FRAN?

This episode is on Argentina's famous FRANs (floating rate accrual notes). The notes were intended to protect holders against the risk that the country's credit would deteriorate... and boy did they ever. Due to a drafting glitch, or a simple failure of imagination, the FRANs wound up earning a few lucky (well, smart) investors somewhere around 100% annual interest. Argentina's unsuccessful effort to avoid paying also raised some entertaining questions of contract law. It's not common for sovereign states to raise the unconscionability defense. Ben Heller joins us to talk about the FRANs, with some bonus discussion of dodgy exit amendments.

Producer: Leanna Doty