Posts tagged 'Debt Restructuring'

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

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

Credit Suisse reads Piketty

This FT Alphaville writer hasn’t read Capital in the Twenty-First Century (YES, OKAY, SORRY).

However, this is so good from William Porter and team at Credit Suisse, it’s time to reconsider: Read more

Tax doesn’t have to be taxing, except when it’s a Greek bond tax [updated]

“R-r-r-r-retroactive?”*

We can imagine that’s something of a trigger word for Greek bondholders with long memories. Read more

Ukraine, Gazprom, and the full faith and credit

How many sovereign debtors get to be both in hock to the Russians, and using the United States’ full faith and credit to borrow fresh money?

Though we suppose Ukraine’s a special case: Read more

It’s Mostly Fiscal, Ukraine edition

The currency devaluation and official borrowing (to help finance a still-wide government deficit) are expected to push public sector debt up to 57 percent of GDP…

IMF announcement of $17bn loan programme for Ukraine

Although don’t worry — that’s a whole 3 per cent before a unique debt threshold clause conceivably allows the Russian government to convert $3bn of Ukrainian bonds, which it owns, into demand money. Read more

Guest post: The IMF approach to sovereign debt restructuring

This year’s IMF-World Bank Spring Meeting is likely to include discussion of proposals to change the fund’s policy on sovereign debt restructuring. Gabriel Sterne, senior economist at Exotix with IMF experience, and Charles Blitzer, Principal at Blitzer Consulting and a former IMF staff member, argue in favour of a case-by-case approach.

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Pari passu, plus ça change

Ah, spring: a season of renewal. The scent of flowers carried on a gentle breeze.

And the international financial community can go back to arguing all over again about whether a promise which Argentina made in a bond issued twenty years ago – to treat creditors equally – will end up making sovereign debt restructuring harder to achieve. Read more

Guest post: Mr Putin’s clever bond issue

What to do when your creditor invades? Beyond its occupation of Crimea, Russia remains a lender to Ukraine — even as IMF teams ponder the Kiev government’s financial sustainability. Mitu Gulati, a law professor at Duke University, considers both sovereigns’ options.

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Bondholder Hypo-thermia, in Austria

These are some mountains in Carinthia, Austria. Bucolic.

That, meanwhile, is the logo of Hypo Alpe Adria, a regional lender rescued by the Austrian government in 2009, and which has now sprung another, €800m black hole… and it is just possible that the name is going to be as memorable as Amagerbanken or SNS Reaal for European banks’ bondholders. Potentially it may be a less than bucolic precedent for sovereign debt, too. Read more

Swap ye not Argentine bonds

IT IS HEREBY…

DECLARED that for the avoidance of doubt (i) the implementation of the plan to allow Exchange Bonds to be exchanged for securities or similar instruments payable in Argentina, which was announced by President Fernandez de Kirchner in her speech of August 26, 2013, (ii) implementation of any functionally equivalent or reasonably similar plan, or (iii) any step towards implementing (including without limitation the formulation or design of) such a plan or a functionally equivalent or reasonably similar plan, each would violate the Anti­ Evasion Injunction of the March 5 Order and Paragraph 2 of this ORDER…

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Dates for the pari passu diary

This comes via Shearman & Sterling, in their note on Argentina’s crunching defeat at the Second Circuit (and its Supreme Court litigation options for avoiding paying holdouts alongside current restructured bondholders, which it might have just blown up)…

Emphasis on ‘illustrative’. This is a case where an appeals court ruling has just landed about four months after it was first described as ‘imminent’. Read more

Argentine roulette

They did it! They finally did it, post-Second Circuit fiasco:

[Bloomberg] Argentina will send a bill to Congress tomorrow [August 27] to reopen a debt restructuring for those creditors who haven’t accepted previous swaps after the nation’s 2001 default, said President Cristina Fernandez de Kirchner…

She also said that holders of restructured bonds, who accepted discounts of as much as 70 percent, will be able to swap them into securities governed by Argentine law in a bid to prevent payment disruptions from a U.S. court ruling in favor of the holdouts.

We first looked at the why and how of using a local-law swap to get round the pari passu problem which Argentina has made for itself — back in November. That’s how interminable this pari passu saga has been.

Much more in CFK’s speech. Come for the baldly disingenuous assertion that calling Argentina a “uniquely recalcitrant” debtor is “un poco injusto”; stay for confirmation that the new bonds would be paid through Caja de Valores, the local clearing house. Surely it’s not about showing credibility to the Supreme Court by reopening the swap to holdouts: the actual plaintiffs won’t take the offer, and the judges haven’t considered Argentina’s petition directly yet.

FT Alphaville’s considered take on all this? It’s pretty nuts. Read more

France sallies forth into pari passu case, shows more esprit than Washington surrender monkeys

Quelle blague with the pari passu saga, sometimes.

You go to all this effort to scare off the IMF from so much as bleating some tame reservations to the Supreme Court about how a ratable payment of holdouts by Argentina might hurt global ‘policy’ on sovereign debt restructuring. Despite ‘policy’ being something many expected the fund to look at.

Then you watch the French swoop in anyway. And they’re much fiercer than the IMF was going to be. Read more

The IMF won’t be Argentina’s pari passu frenemy. Why?

Did you hear the one about the IMF sending an amicus curiae brief to the highest court in the United States in favour of taking up the pari passu case of its infamous lost cause, Argentina?

Well here’s the punchline: US opposition has abruptly killed the plan. Read more

A Cypriot bond glitch?

Yes, it’s time for a trip back into those Cypriot debt contracts.

Cyprus announced the results of its sovereign debt restructuring on some €1bn of domestic-law bonds earlier this week. The one the Troika wanted for — OH. Oopsy-daisy. Did FT Alphaville say sovereign restructuring. We meant “debt management operation”Read more

The eurozone’s second sovereign restructuring, confirmed

You can tell it’s the real deal on PSI because of the missing Troika member...

Statement by the European Commission and the IMF on Cyprus Read more

Pari passu: judgment day

Not a reference to the Second Circuit’s imminent ruling in the Argentina case, nor the Argentine government’s late-night petitioning to the Supreme Court over pari passu. Although it could be.

We’ve already seen how NML Capital v Argentina has influenced Grenada’s legal battle with the Taiwanese government-owned Export-Import Bank of the Republic of China.

Now for something that might particularly bear on the future. Read more

Days of future pari passu

Not long now until the US Court of Appeals for the Second Circuit finally makes its ruling on trickier parts of the Argentina pari passu case. No later than early July, probably. Can’t wait.

Argentina couldn’t wait. The government filed its long-expected cert petition to the Supreme Court this week, mostly in order to complain about the federal-law implications of the Second Circuit’s original ruling in October 2012. There’s lots of outrage about ‘sovereign property’ and the US Foreign Sovereign Immunities Act.

But one Taiwanese development bank and its Caribbean island borrower, fighting each other over $32m of defaulted loans in The Export-Import Bank of the Republic of China v Grenada, really couldn’t wait… Read more

Ignored Many Flaws — the report

Click for the IMF’s “ex post evaluation” of its role in the Greek bailout. Its mea culpa.

And if you thought we were being harsh here, parts of the real thing are excoriating.

This is even though the report decides Greece’s exceptional access to IMF lending was justified (generally), and it still says much fiscal adjustment could not be avoided. Policies were “broadly correct”. But it does strongly suggest that debt restructuring should have come sooner.

Excerpts follow…

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Ignored Many Flaws

So, the International Monetary Fund (effectively) wishes to apologise to all concerned for that little thing where it turned into Dominique Strauss-Kahn’s presidential election campaign a few years back.

Sorry if a country got broken along the way: Read more

If you tolerate this, more holdout lawsuits will be next

Well, this was fun while it lasted. Now what did it mean?

Click to enlarge the document capping a weird week in the pari passu saga:

It’s an order from the Second Circuit on Thursday, denying an unusual request filed on Monday by the Italian retail investors who count themselves among Argentina’s holdouts.

Although looking back at it, was the unusual or just ahead of the curve? Read more

The consent of the (bondholder) governed

Sometimes, the courts of England and Wales taketh away when it comes to the law on restructuring bonds and getting debtors out of holes. And other times they giveth.

A landmark decision by the England and Wales Court of Appeal on Monday falls under the latter… Read more

Was that promise of ratable payment wrong? Should Italy not have done that?

File under: Argentina’s battle with its holdouts and the effects thereof on pari passu clauses in sovereign bond contracts elsewhere in the world — with a special crossover to the changing legal status of official lenders in the eurozone crisis.

Spot the difference edition. Read more

Argentina’s gonna make him an offer he can refuse, part one

In theory, there was no offer. “This is a proposal to judges, not an offer to vultures,” Argentina’s finance minister tweeted at the weekend.

For their part, the three judges of the US Second Circuit had ordered Argentina to tell them “how and when it proposes to make current those debt obligations on the original bonds that have gone unpaid over the last 11 years” (emphasis ours). It’s a last act in the battle that Argentina has been losing to stop restructured debt payments being linked to its defaulted bonds under the pari passu clause.

In practice, the 22-page letter that the government sent to the Second Circuit on Friday — containing “options” for holdouts to take payments “equitably and ratably” with bondholders who swallowed its 2010 debt restructuring, by getting restructured bonds in place of the original debt — pretty much was an offer.

And — it looks like — not one the judges can accept. Meanwhile, the market has panicked like wildebeest. Read more

Pari passu, the cross-sovereign contamination

Some excerpts from a lawsuit filed by the Export-Import Bank of China (Taipei) against Grenada in a United States district court on March 4, 2013…

If you have been following the pari passu saga on ratable payment of sovereign debt — they tell their own story. (Click to enlarge all images.) Read more

“Repent, Argentina!” said the ticktock judges (part two)

Continuing our take on the arguments at last week’s big hearing in NML v Argentina…

Last time we looked at what Argentina said; this part will cover its restructured bondholders; Bank of New York, their trustee; and the holdouts.

Though Argentina’s still hogging the limelightRead more

“Repent, Argentina!” said the ticktock judges (part one)

Headline via the Harlan Ellison short story. “Timewise, it was jangle…”

What a week for the pari passu saga, and the fight to show that an order for Argentina to pay holdouts ‘ratably’ alongside its restructured sovereign debt is both over-reaching, and an unfair threat to third-party bondholders and banks.

Yep, FT Alphaville also went along to the oral argument before three judges of the Second Circuit in NML v Argentina on Wednesday, along with about 300 other people. A pretty crazy affair in itself, the hearing has now led to a follow-up order from the court, telling Argentina to give “precise terms” explaining how it would pay holdouts, and how it would obey any decision of the Second Circuit. Read more

Bondholders, a two-pack, and “all necessary measures”

The EU’s Council and Parliament agreed on the text for two-pack laws on “enhanced surveillance” of sovereign bailouts on Thursday. It should be on the books soon.

So, if what happened in Greece last year was “exceptional and unique”… Read more

I can’t Belize it’s not ratable payment [updated]

Update (Feb 26) – It turns out that we failed to be clear on something pretty important here… rendering our headline ironically pretty apt. Maybe you really can’t believe Belize’s disavowal of ratable payment on its bonds.

OK, so here’s the section on pari passu language in the new bonds’ Offering Memorandum: Read more