Take one warship rescued from asset seizure by bond holdouts.
Add swelling music, defiant rhetoric by President Cristina Fernandez de Kirchner, the national flag stirring in the Atlantic breeze, and messages home from crewmen who remained on board while the dispute played out in a Ghanaian port and Hamburg tribunal… Read more
And so an Argentine training warship is free to sail off into the sunset, and out of the clutches of bond holdouts.
A riddle, wrapped in a mystery, inside an enigma, inside a pari passu clause.
Here are some terms from Italy’s 2015 US dollar bond, which it issued under New York law in 2010. It is a pari passu clause, even though you won’t find the words ‘pari passu’. Read more
Greece paid up to 40 cents in the euro for one of the bond in its buyback. Average price: 33.8 cents in the euro.
Or rather wants to pay. It has “advised… official creditors” that it wants another €1.29bn in EFSF notes to purchase all of the bonds tendered, up from the original €10bn.
The results, in table form via this release (click to enlarge): Read more
Yep, this is a Greece post in a series on Argentina and the pari passu saga.
We’ll explain. Read more
On October 26, the Second Circuit chucked out Argentina’s appeal against having to pay bond holdouts, having had “little difficulty concluding” that the defaulted debt’s dusty, old — but contractually standard — pari passu clause demanded rateable payment. Read more
And so ends a little saga-within-a-saga in the Argentine bond holdout case (but one which shed interesting light on the various sides’ litigating strategies). Read more
UPDATE – Beyond the to-and-fro about stays and the Second Circuit in the post below…
Bank of New York Mellon has filed for leave to appeal Judge Griesa’s revised order for Argentina to pay (and for third parties not to assist it in not paying – including BNY). This is a significant move given the role of BNY enabling payments to restructured holders as their trustee. It was kind of stuck in the middle over the dispute between Argentina, holdouts and restructured bondholders, and had last asked courts to clarify its obligations. This filing marshals indenture trust law, Rule 65(d) of the Federal Rules of Civil Procedure, and “dangerous precedent” to seek to challenge the merits of Judge Griesa’s ruling itself. Read more
Latin American country tells creditors they can’t be serious…
While acknowledging that the Committee’s counter-proposal provides a degree of short-term cash flow relief, the GoB considers it to be wholly incompatible with its objective of placing the country’s debt burden on a sustainable footing – a goal that the Committee itself has indicated it is committed to at various stages. The GoB believes that the counter-proposal ignores Belize’s high overall debt levels, and that it amounts to little more than a short-term fix not dissimilar to the 2007 exercise. Read more
Looks like those emergency bondholder briefs had some effect on the Second Circuit…
IT IS HEREBY ORDERED that the motion by the Exchange Bondholder Group for leave to intervene as interested non-parties for the purpose of appealing orders entered by the district court on 11/21/12 and for the purpose of seeking a stay pending appeal is GRANTED. Read more
Stay, actually. An emergency motion for a stay on Judge Griesa’s sweeping order in the Argentine bond holdouts case — filed on Monday night by the Exchange Bondholder Group:
It’s fair to say that many of those following Argentina’s grand bond holdout battle have been simply flattened by this week’s turn of events.
(Sometimes, literally so.) Read more
Let’s say you took part in Argentina’s original, 2005 debt restructuring.
You exchanged your luckless bonds for securities worth around 30 cents of your original dollar. You took your lumps – and you checked, very carefully, the complicated payment structure designed to ensure the Republic can’t stiff you in the future. Read more
For the complete experience of Judge Griesa ordering Argentina to pay holdouts in full and, even more importantly, extending duties to comply with that order to a very wide range of third parties…
Make sure to read his opinion on the pari passu basis; then the amended order to pay; and also — and a red rag to the bull for a government which is very unlikely to make that payment — a ruling that “threats of defiance” from Buenos Aires have pushed him to December 15, 2012 as the due date. No waiting around for the gavel to strike, here. Read more
Mark Weidemaier at Credit Slips has been blogging up a storm lately on why the Republic of Argentina’s fight with its holdouts has become so critical to the future of debt restructuring.
Now here he is on a blast from the past… Read more
Argentina files its latest brief against paying holdouts alongside its restructured debt today (Friday). That’s following this contretemps with Judge Griesa, and another difficult week for Argentine credit.
Whatever it says, you can be pretty sure it’ll have sharp words for Elliott Associates and the holdouts.
We’ll post when we get it. But first, why this – and other briefs that should be coming – matter so much… Read more
Complicated, ambiguous, a Heath Robinson machine of sovereign debt payment.
Those are all good ways to describe the likely legal strategies that are now open to Argentina, if it proposes to go on freezing out holdouts but continue paying out on restructured foreign-law debt. That’s after last Friday’s landmark US Court of Appeals decision. Read more
Beyond all the interesting (maybe precedent-setting) stuff about pari passu…
Since last week’s US Appeals Court ruling went against Argentina, there’s been a lot of comment about how the country could try changing the trustee or payments structure of the bonds which came out of its 2005-2010 restructuring. Read more
Argentina’s selective recitation of context-specific quotations from arguably biased commentators and institutions notwithstanding, the preferred construction of pari passu clauses in the sovereign debt context is far from “general, uniform and unvarying”…
That’s the U.S. Court of Appeals for the Second Circuit on Friday – in a sovereign debt ruling which might just set an interesting precedent or two. Read more
A read for the train home from Buchheit (who helped mastermind the Greek restructuring at Cleary Gottlieb) and Gulati on the options now facing the eurozone’s sovereign debtors and those holding the purse strings.
Not too surprisingly:
[Their paper] concludes that there are no painless or riskless options. In the end, the question may come down to this — to what extent will the official sector sponsors of peripheral Europe be prepared to take on their own shoulders (and off of the shoulders of private sector lenders) a significant portion of the debt stocks of these countries during this period of fiscal adjustment?
Big props to Bloomberg for putting this little-known case on the radar (don’t worry, we’ll explain):
Oh dear. Terrible pun.
Anyway — debt management trial balloon du jour? Read more
Hard to believe it was six months ago.
If you think the fat lady hasn’t yet belted it out on the possibility of future sovereign debt restructuring in the eurozone… (and who’d rule it out, ECB actions notwithstanding) Read more
A reminder of why the ECB’s promise to “address” seniority in its new bond purchases matters so much (click to enlarge):
Loads has already been written about last week’s judgement by The Hon Mr Justice Briggs against Anglo Irish, taking a hammer to ‘exit consents’, a key bit of legal engineering in debt restructurings for banks and, sometimes, sovereigns. (There’s a great take by Credit Slips here for instance.)
It was that kind of case. Read more
Update (0445am UK time) — Well, well, well… eurozone leaders did indeed promise not to subordinate Spanish bondholders at the summit, as we assumed they would below. Seniority was “renounced” in the case of Spain.
That phrase suggests a reversion to the original status of official eurozone bilateral and EFSF loans – of being at least pari passu with bondholders. (Though at times the loans have even been subordinated on some points, such as restructuring interest rates. The status is a political football subject to constant change, you could say.) Read more
Via RTÉ News earlier, hat-tip Lorcan…
In an effort to secure a return of Ireland to the markets, sources say the Troika is considering adjusting the terms of the country’s repayments. Instead of paying back EU loans over an average of 15 years it is considering extending them to 30 years. Read more
Amazing what sometimes comes out of the European Parliament.
That’s an amendment from Jean-Paul Gauzès, Member of European Parliament, to the otherwise fairly sober draft legislation on how EU bodies should monitor governments’ finances, including bailout programmes. Dubbed the “two pack”, the draft legislation (including the Gauzès amendment) was approved by MEPs on Wednesday. This won’t come into force until the European Council has reviewed the legislation, which is going to mean months of negotiation, rejection of parts of the measures, and amendments, probably. Read more
All right. Imagine you’re a sovereign debt manager…
Picture yourself back in the pre-LTRO days of late 2011. Two-year Italian bonds yield 7 per cent, buyers are gone, foreign holders are rushing to sell. Read more