Update: Seems we were right to regard this as curious…
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- 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.
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
That’s the gist of the latest from Judge Thomas P. Griesa…
On Wednesday the District Court judge ordered Deutsche and JPMorgan to turf over documents on the “flow of funds” relating to an unofficial, $2bn sale they were arranging of US dollar-denominated — although not US-law — bonds (Bonars) issued by Argentina. Read more
We think this means the ECB doesn’t want Greece to end up defaulting.
Compare (a press release from Daniel Pollack, a court-appointed negotiator, on an Elliott offer to talk to Argentina in the pari passu mess):
The invitation by the Bondholders was without pre-conditions and offered the possibility to the Government of Argentina of a settlement without any present payment of cash, details to be negotiated. That invitation was transmitted by me to Counsel for the Government of Argentina, Cleary Gottlieb, on January 30, with follow-up calls by me over the next two weeks. The Government of Argentina has neither accepted nor otherwise responded to the invitation by the Bondholders. Read more
One may think that this retreat from game theory is motivated by some radical-left agenda. Not so. The major influence here is Immanuel Kant, the German philosopher who taught us that the rational and the free escape the empire of expediency by doing what is right.
Q. You are a foreign judge being pulled into one of the longest, biggest, stupidest sovereign debt cases in history, one which is presently in limbo in a US court. The debtor has become distracted by a political nervous breakdown at home and may have taken leave of reality altogether. The creditors can’t stand each other, and no one has been getting any money for months, because of the effects of a single bond clause drafted over two decades ago. How do you proceed?
Click below for the attempt of Mr Justice David Richards of the High Court of England and Wales: Read more
While we patiently wait for Wednesday’s late-night Eurogroup meeting to decide nothing about Greece…
Surveillance – the ECB’s role in the Troika has recently been questioned by the ECJ, and so some “rebranding” of the monitoring has looked likely. But the basic structure of program targets and reviews will remain in place. Read more
Over in Mac McQuown’s Sonoma Valley workshop, courtesy of Bloomberg Markets…
McQuown says his eBond will enable investors to jettison their credit risk because the swap, which is essentially a form of insurance, will cover their losses should the debtor fail. To garner such protection now, an investor must purchase a swap separately to cover a bond. Read more
It’s Friday. You probably can’t wait for the weekend after a tough week.
Did you know there’s something called the Eijffinger-Geraats central bank transparency index?
There is one. It’s in the Warsh Review. On Thursday, the Bank of England accepted the review’s recommendations in favour of more open central banking. So, it decided to release minutes of meetings alongside policy decisions as they come out, to release transcripts of those meetings eight years later — and to hold fewer meetings a year from 2016 (8 versus 12). Read more
Q. How do you tell the $65bn sovereign wealth fund of a notoriously erratic government that it might lose all its money on trades you arranged for them?
A. Very carefully.
______________ Read more
Ukraine will probably end this year with public debts over two-thirds the size of its economy. We won’t know the exact figure until March when official statistics come out, nor if those statistics will be able to count the GDP of the separatist east.
But it is not looking good. We thought this rated a reminder.
With Argentina in default, the pari passu saga has become a long, ludicrous, gruelling standoff — which plenty of financial institutions and Argentina’s restructured bondholders have been trying to escape.
And then running smack into the US court system.
On Friday the Second Circuit Court of Appeals dismissed an appeal by Citibank to get local-law, US dollar-denominated restructured bonds (the ones with the ISIN confusion) out of the pari passu embargo: Read more