Biography
Latest posts

- The Greek government

- One or two French banks

- The Finnish government

- Spanish banks, UK banks, hmm a few banks really

These are just some of the world-class institutions Joseph has managed to annoy with stuff he’s dug up over the years. He joined FT Alphaville way back in March 2010.

Joseph likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

He doesn’t have a finance background.

Contact Joseph Cotterill

Exorbitant privilege, meet pari passu

With less than a fortnight until Argentina risks defaulting on its restructured debt, there will be another hearing in the pari passu saga later on Tuesday. After a look at Argentina’s position, now for what Judge Griesa’s hearing will focus on — restructured bondholders who argue that he has no jurisdiction over them…

Notably, local-law restructured bondholders. Read more

The RUFO persecution complex

“Madmen in authority, who hear voices in the air,” Keynes wrote at the end of the General Theory, “are distilling their frenzy from some academic scribbler of a few years back.”

In Argentina, the scribblers are sovereign bond contract draughtsmen. Read more

Inverting AbbVie into ǝıVqqA

Over on Lex this week we’ve been pondering the finer points of what shareholders get out of tax inversions.

So… from the text of AbbVie’s planned £32bn merger with Shire, announced on FridayRead more

Sell Rosneft, buy AK-47s

From the US Treasury’s Office of Foreign Assets Control on Wednesday:

The following transactions by U.S. persons or within the United States involving the persons listed below are hereby prohibited: transacting in, providing financing for, or otherwise dealing in new debt of longer than 90 days maturity of these persons (listed below), their property, or their interests in property…

Note that wording carefully. “US persons” could extend beyond the US. Meanwhile “new debt of longer than 90 days maturity” could extend beyond US dollar debt.

It does not, however, include US dollar clearing generally, the US Treasury says. Nor, it seems, CDS which references prohibited underlying debt.

Now note whose debt — not all transactions; debt — US banks, US clearing systems, and US investors may be prevented from dealing with accordingly: Read more

Meanwhile, at summer camp

If Google or 21st Century Fox is interested in buying Time Warner, it’s news to Jeff Bewkes.

“I know nothing about it,” the media conglomerate’s chairman and CEO told Variety at the Allen & Co. media conference in Sun Valley, Idaho, on Wednesday when queried about reports that the two companies were eying Time Warner… Read more

Rupert’s bear hug

An $80bn scoop on Dealbook…

Fox first approached Time Warner in early June, these people said. Chase Carey, the president of Fox and a longtime top lieutenant to Mr. Murdoch, met privately with Time Warner’s chief executive, Jeff Bewkes, these people said. Later that month, Fox delivered a formal takeover proposal worth $85 in stock and cash for each Time Warner share. Read more

The data keiretsu, continued

Apple and IBM’s shared vision for this partnership is to put in the hands of business professionals everywhere the unique capabilities of iPads and iPhones with a company’s knowledge, data, analytics and workflows…

 Read more

We are negotiating. You are litigating. They are going for the eyes

“The recalcitrant scum of the earth, I believe?”

“Ah, the vultures of global usury, I presume?”

To commemorate the beginning of negotiations in New York later on Monday between Argentina and Elliott… Read more

Seventy Bitcoin risks

Click to enlarge, via the European Banking Authority’s response to virtual currencies. Do note E31.

 Read more

ALL-CAPS PARI PASSU

Dear Cleary Gottlieb (Argentina’s lawyers): good luck defending this one.

From page 7 of Monday’s dead-tree FT — Argentina’s announcement that it is about to default. Naturally, given the bizarro world of the pari passu saga, this announcement is headlined ARGENTINA PAYS. Click to enlarge: Read more

Your move, Argentina

Judge Griesa has denied Argentina’s request to stay the pari passu order beyond June 30 (below).

Argentina has said that it’s deposited enough money to pay the restructured bonds on that date. Read more

Let the generational war begin

(Disclosure: the author is 27… and renting.)

From the UK Prudential Regulation Authority’s consultation paper on the loan-to-income cap… Read more

London gets a monetary policy

The PRA and the FCA should ensure that mortgage lenders do not extend more than 15% of their total number of new residential mortgages at loan to income ratios at or greater than 4.5. This recommendation applies to all lenders which extend residential mortgage lending in excess of £100 million per annum. The recommendation should be implemented as soon as is practicable.

 Read more

Why the vultures aren’t the big problem

Or, why the pari passu saga’s legacy won’t be to make holdouts all-powerful in sovereign debt, a worry expressed by Martin Wolf in his latest column.

Not quite. Rather, it will make holdouts just powerful enough so that the system becomes haphazard, interminable, and frustrating for everyone, we’d argue. And that would be the real problem. Read more

Dubai — to sell

Well, we did ask. That’s the Dubai bourse down almost 8 per cent at pixel time…

 Read more

A letter to Judge Griesa

Delivered by Cleary Gottlieb on Monday — and freshly tweeted by La Presidenta. Click to enlarge: Read more

Pari passu: CDS interlude

Hat-tip to Joe Rennison at Risk.net, and Bloomberg — a mystery “CDS Holder” has asked Isda’s determinations committee to look at whether Argentina’s government could have potentially triggered CDS on the country during its confused responses to defeat at the Supreme Court last week…

The request — to extend a maturing CDS contract, hence the ‘potential’ language — centres on the economy minister’s statement last week that the judgment made paying the restructured debts “impossible”: Read more

About that Ukrainian bond Russia owns…

Russia says Ukraine hasn’t paid interest due June 20 on that $3bn eurobond.

Ukraine said on Thursday that it had. Read more

There goes the “no pasaran” plan

Here’s the order which Judge Thomas Griesa made late on Friday, forbidding Argentina from swapping its restructured bondholders from New York law to its local legislation… Read more

Sovereign debt reprofiling, take two — from the IMF

The IMF has picked its week to publish another paper on changing its sovereign debt restructuring policy…

Although the paper released on Friday — which follows an initial review last year — isn’t about Argentina, pari passu, and holdout issues. It’s about Greece. Read more

Fun with banks’ fair value (and DTAs)

Citi analysts have read 38 European banks’ annual reports for last year.

People who value their sanity are not supposed to do that. (HSBC’s 2013 report, all 590 pages of it, is pictured below.) So it’s interesting to note what Citi found. Read more

They shall not pass (but let’s try and reroute our bonds around them anyway)

We cannot allow that we are prevented from honouring our commitments to 93 per cent of bondholders. We are going to initiate a debt swap to pay the bonds in Argentina, under local legislation…

That would be Axel Kicillof, Argentina’s economy minister.

Late on Tuesday, Kicillof revealed the Argentine government’s actual plan for life after its final defeat in the pari passu case — a canje, or swap out of New York legislation into local law for its restructured debt, to avoid paying everyone (or no one) in New York as per the pari passu injunction.

If you can’t get the US courts to throw the problem out of your bonds, get your bonds away from US courts.

A flawless plan — if the US courts weren’t already furious with Argentina, and if the entities whose help the republic would need to organise a swap (lawyers, payment agents, and so on) weren’t subject to those courts. Read more

A message from CFK

The fact is that Argentina has shown, and maintains, a willingness to negotiate. What it does not hold with is, well, let’s say it, let’s spell it out, to be subjected to extortion. I do not believe that either our country or our bondholders deserve to have impeded, or to have seized, the funds that we will pay later this month, on June 30, we have $900m maturing and we will pay it…

I have instructed the ministry for the economy and all the technical agencies of the national state to prepare all the instruments and all the strategies necessary such that all who put their confidence in Argentina get their money, get the dollars which we have committed to pay. But we want to do that with seriousness and responsibility.

 Read more

Bad day to be a recalcitrant sovereign debtor

And yet somehow — we sense the pari passu saga isn’t over yet.

This would be despite the completeness of Argentina’s defeat in the sovereign debt trial of the century… Read more

Insurgent finance

A start-up whose balance sheet expanded more than 250 per cent overnight might ring alarm bells.

On the other hand, this one’s nasty enough already: Read more

The injunction has landed: Pari passu, the Black Eagle, and sovereign debt enforcement

Later on Thursday, the US Supreme Court may decide whether to accept or reject Argentina’s pari passu case. Rejection could mean a swift end to the saga. Argentina would be left to decide whether to comply with paying bond holdouts alongside its restructured debt, or defaulting on both, or settling with the holdouts.

It’s always possible however that the court decides another day, or just asks the US Solicitor General to advise. That can take months. Hey. It’s the pari passu saga. (Update: no decision after all from the court on Thursday, it seems.)

Still, this is a moment for the enforcement of sovereign debt, supposedly the least enforceable of financial instruments. That’s a fascinating subject in itself. In fact we argued in a paper forthcoming in the Capital Markets Law Journal that the origins of pari passu may lie in enforcement. What pari passu ‘means’ in sovereign debt may not matter so much as its use.

We wrote it as one of many responses to Mitu Gulati and Benjamin Chabot’s great study of one possible origin for pari passu, in a Mexican bond of the 1840s, the ‘Black Eagle’. We’ve placed an expanded and version below. Warning, it’s 2,500 words and is in an academic style. But we hope it’s some context for the saga… Read more

2012: Whatever it takes. 2014: Everything it takes

For all practical purposes we have reached the lower bound…

But also:

Are we finished? The answer is no… within our mandate, we’re not finished yet.

Both were statements by Mario Draghi on Thursday. It’s really the swarming effect of the policies the ECB announced on Thursday, after all, right? Not so much the Outright Monetary Transaction-style bravura, which (let’s not forget) the market also underestimated two years ago. Read more

The negative zone

Wait for those “details” on how the ECB will operate negative rates — plus “Further monetary policy measures to enhance the functioning of the monetary policy transmission mechanism”… (sounds like an LTRO to us)

But for now, note the red.

 Read more

Crown contagion

Pope Benedict XVI (sovereign of the Vatican City State) – 2013

Queen Beatrix of the Netherlands – 2013

King Albert of the Belgians – 2013

King Juan Carlos of Spain – 2014

Contagion is facetious. But perhaps Europe’s monarchies have become as confused and listless as other once-impermeable institutions on the continent.

Or does the rash of abdications mean that they’re actually the only institutions who get the need for change? Read more

Recalcitrant, moi? The courtroom version

On Thursday, we reported on a memo by Cleary Gottlieb, lawyers to Argentina in sovereign debt matters.

The memo suggested that the “best option” for its client would be to default upon its restructured bonds — then to immediately reroute their payments beyond the reach of US courts — should the US Supreme Court decline in the coming weeks to review an order requiring holdouts to be paid too. (Update: full memo here, as a Word doc.)

Which is rather extraordinary advice. The memo also emerged in the week Argentina supposedly showed good faith to the Paris Club. (And in fairness, the memo also considers settling with holdouts).

On Friday, the holdouts’ lawyers beat a path to the courthouse. Read more