Let’s go back in time — to May 2014. Deutsche Bank was in the market to raise capital, including at least €1.5bn of additional Tier 1 capital securities. Or CoCo (short for contingent convertible) bonds. Read more
For a writer about skin in the game, here’s someone who seems not to like Tim Geithner putting more of his skin in the game of private equity investing.
— NassimNicholasTaleb (@nntaleb) February 8, 2016
After a long hiatus, a convoluted saga gets a new cast of characters.
Although has the basic plot changed very much? Read more
Or, in chart form via Investec… Read more
All those San Francisco meetings paid off.
Franklin Templeton and other private creditors will agree to swallow a writedown on their Ukrainian bonds. Cutting a fifth off bond principal, it’s much less than many expected. Bond prices were rallying hard at pixel time.
Then there is the issue of Moscow. Since Russia’s said no about restructuring its own Ukrainian bond. Read more
Or, a coda to our recent post on hacking the world’s most expensive asset class.
If investors locking up their money in leveraged buyout funds really could have gotten the same aggregate return all along simply by buying the right, leveraged stocks in the public market — then there’s an interesting implication.
Why isn’t everyone already doing it? Read more
That would be the Santiago Principles signed up to by sovereign wealth funds in 2008, regarding good governance — including via-a-vis the custodians of SWFs’ often-plentiful assets.
While it was BNY Mellon who paid nearly $15m on Tuesday to settle SEC charges that it handed out internships to the family of a SWF client’s official, in order to retain the fund’s business… Read more
Following the results of the Asset Quality Review and Stress Tests before the end of the year, the bail in instrument will apply for senior debt bondholders whereas bail in of depositors is excluded.
– Eurogroup statement on Greece, August 14th
Which ‘instrument’ might that be for wiping the senior bonds of under-capitalised Greek banks? Read more
In segment 1 of ‘Alphabet, Inc.’: Boring things that make money
In segment 2: Eternal life, meatbagless cars, talking thermostats Read more
Another sovereign issuer started defaulting on its debt on Monday — treading a path well-worn by governments who run out of money.
This is Puerto Rico and the US muni market however, so the actual statement from its Government Development Bank, on missing a Public Finance Corporation bond payment, might make it appear as if things are different this time: Read more
Here is another very strange, and short, document. Click to read.
It’s an update to the Greek debt sustainability analysis by IMF staff — yes one of those analyses again — which was originally published just before Greece’s July 5th referendum. Read more
Deep down in Tuesday’s nuclear agreement between Iran and six great powers… (emphasis ours) Read more
At length. Because haven’t you heard?
Germany is a hypocritical creditor.
It won’t give Greece the debt relief which it received itself in the 1950s.
Thomas Piketty said it. So it must be true: Read more
Here is an earnest, but very strange, document. Click to read.
It’s a Greek debt sustainability analysis by IMF staff. Yes, one of those analyses. A preliminary one, but in many ways the DSA to end all DSAs. Read more
This belief — that an implicit official sector guarantee has quietly settled over every sovereign debt instrument issued by every geopolitically significant country on the planet — is a fallacy. The moral hazard implications of allowing this idea to prosper are staggering. More importantly, the official sector lacks the resources to make good on such an implicit guarantee, even if it wanted to do so.
– Lee Buchheit, ‘Sovereign fragility’, 2014
Coming home to roost now though, isn’t it? Read more
The decision being to keep emergency liquidity to Greek banks going at its level last week. From the ECB’s Sunday statement: Read more
After that late-night announcement in Athens of a July 5th referendum, the response on Saturday…
In one sense, Greece’s full membership of the euro is, quite literally, already being consigned to the footnotes of history.
She’s a little busy with Greece at the moment. But just under two weeks after Christine Lagarde read the IMF equivalent of the riot act to Ukraine’s biggest bondholders over its debt restructuring…
They’ve responded. See below for the full open letter from Ukraine’s creditor committee on Wednesday: Read more
The governments change, the debts change. The rhetoric, on the other hand…
In light of the Greek prime minister’s recent ‘humiliation’ speech and the rather heated reaction it’s had among official creditors (and private bondholders) – we thought we heard some historical echoes. So we took a quick look through the archives. Read more
It’s jargon-tastic and it’s come out of Washington DC late on a Friday, but do read this IMF statement on Ukraine’s debt restructuring. As Barnejek tweeted, it’s financial history in the making… Read more
Click above for the prospectus for the 100-year bond being marketed on Monday by Petrobras, the Brazilian state-owned oil giant and sometime corruption-riddled enterprise.
Pricing (says Bloomberg) is somewhere around 8.8 per cent. Read more
On May 28, Ukraine will pay $88m in interest on its $2.25bn bond due 2022.
On June 20, it will also pay a $75m coupon on that $3bn bond owed to Russia.
Well, we say ‘will.’
This might get in the way first: Read more
Back in April, five leading owners of Ukrainian bonds formed a committee to negotiate a restructuring with their debtor – and avoid losing money on their approximately $10bn principal in the process.
Now count the names in this release on Monday… Read more
Are you an EM fund manager?
Do you live in London or New York?
Were you by any chance offered some of the $1.4bn of Bonar 2024 bonds issued by Argentina on Wednesday, bought by Deutsche Bank and BBVA on Thursday, and settling this Friday? Or maybe you’d like to buy these bonds in the near future.
Then congratulations. You might well also be buying yourself a ticket to the next exciting stage of the pari passu saga.
PS: this may now involve the holdouts personally hunting you down. Read more
There have been a few doubts lately about whether Ukraine was going to include that $3bn Russian bond, issued in 2013 and maturing this year, in its debt renegotiation with private creditors.
Well, over to a resolution by the embattled country’s Cabinet of Ministers… Read more
Update: Seems we were right to regard this as curious…
Late on Thursday the IMF walked back on the idea the Russian bond is official debt, per Reuters: Read more
The Russia problem aside, Ukraine’s other big task in its $15bn debt restructuring will simply be to convince private bondholders that it’s a deal worth taking.
One way to do that is for bondholders to realise they are dealing with a government burdened with the costs of war and as it happens, increasingly absorbed in an intense lustration campaign.
But some of them (quite possibly one that lives in San Mateo, CA) could have holdings large enough to block a bondholder vote. So, even if Natalie Jaresko, the Ukrainian finance minister, does like to quote Margaret Thatcher about there being no alternative… the new bond terms will need to justify taking a massive haircut compared to holding out for full payment.
Another way to do it? Note how ripe for abuse the old bond terms are.
When Lee Buchheit, Ignacio Tirado and Mitu Gulati were looking deep within the innards of Cypriot government bonds just over two years ago — shortly before the climax of the island’s debt crisis — they found something exciting. Read more
Well, shouldn’t buyout firms be a little perturbed by things like this?
PITTSBURGH and NORTHFIELD, Ill., March 25, 2015 /PRNewswire/ — H.J. Heinz Company and Kraft Foods Group, Inc. (NASDAQ: KRFT) today announced that they have entered into a definitive merger agreement to create The Kraft Heinz Company, forming the third largest food and beverage company in North America with an unparalleled portfolio of iconic brands… Read more
All it took was 11 days — and one schtum Kremlin spokesman — to make people wonder recently just how strong and secure a ruler Vladimir Putin really is.
They might want to look inside his Ukrainian bonds next. Read more