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
Thank you, Reuters.
We’ve long been admirers of Lee Buchheit, who helped mastermind the Greek restructuring at Cleary Gottlieb. Read more
Something you will never ever read in an IMF report on Greece…
Yes, the headline’s a pun. A very bad one.
The following aren’t particularly new criticisms of the legacy set by Greece’s debt restructuring (least not on FT Alphaville)… Read more
Subordination of private bondholders by the official sector is already very acute. This means that the more a PSI exercise is delayed, the higher the haircut on the notional needs to be for a given level of debt relief. Consequently, the sooner a PSI exercise happens, the better…
Not Greece 2011, but Portugal 2012. Read more
So it turns out that we won’t know, for a little while longer, who the holdouts are in Greece’s foreign law bonds – a remaining pimple on the bottom of its debt workout.
Greece has pushed back the deadline for foreign law bondholders to agree to a debt restructuring to April 4, as IFR reported on March 23. The deadline was meant to be March 23. Read more
Noting for the record… (H/T Lorcan Roche Kelly of Trend Macrolytics)
Our Brussels Blog colleague Peter Spiegel has penned a great piece on the latest IMF report into Greece, covering the Hellenic Republic’s ‘Request’ for the second bailout.
Even at more than 200 pages, the report’s worth reading. Read more
It was never going to be the world’s largest sovereign debt write-down. That was Greece last week. Anyway, how could it. The Federation of Saint Kitts and Nevis is the smallest country in the Western Hemisphere. But did it have a big debt overhang — some 160 per cent of GDP.
Fortunately St Kitts and Nevis successfully closed an exchange offer for its bonds on Friday: (Click image for press release) Read more
Fitch had already given notice they would raise Greece’s credit rating from restricted default — it’s a technical thing related to the ‘cure’ of Greece’s default by completion of its bond swap.
And so the new Greek bonds are now rated B-… Read more
Update – Aargh maybe we do have to stay up. Reuters has a Greek official bandying round a nearly 95 per cent participation rate figure. Also see the FT’s update below.
Looks like FT Alphaville New York won’t have to stay up until the wee hours of Friday morning after all — from the FT: Read more
Greece has threatened to default on bondholders who do not take part in a €206bn debt restructuring, a move that turns up the heat on potential holdouts ahead of a deadline on Thursday, the FT reports. The country’s debt management office warned in a statement that it “does not contemplate the availability of funds” to pay off creditors who opt not to tender their bonds. Rules on bondholder quorums and votes needed to trigger collective action clauses in Greek law bonds mean that “there is an air of inevitability” that holdout investors will be bound into the exchange based on the current likely participation rate of 75 to 80 per cent, the WSJ adds. Read more
Latest from the Greek finance ministry (its debt manager has met German banks):
The Republic confirmed that if it receives sufficient consents to the proposed amendments of the Greek law governed bonds identified in the invitations for the amendments to become effective, it intends, in consultation with its official sector creditors, to declare the proposed amendments effective and binding on all holders of these bonds. Consequently, all obligations of the Republic to pay holders of those bonds any amount on account of principal will be amended to permit the Republic to discharge these obligations in full by delivering to the holders of the amended bonds on the settlement date the consideration described in the invitations. In addition, the Republic’s obligation to pay interest on its Greek law governed bonds will be amended so as to reduce the amounts due to interest accrued through 24 February 2012 and to provide that such amounts will be paid by delivering short-term EFSF notes in lieu of cash. No further interest will accrue or be payable on those bonds. Read more
Greece is ready to force bondholders into writing off €100bn of its debt if they don’t volunteer this week, Evangelos Venizelos, its finance minister has said. “This is the best offer because this is the only one, the only existing offer,” Venizelos told Bloomberg TV. Some twelve banks, insurers, asset managers and hedge funds in the steering committee of the Institute of International Finance said they would take part in the bond exchange, reports the FT. Institutions represented by the IIF, including Greek banks, are likely to hold significant amounts of Greek bonds, but the government faces resistance from state pension funds which claim the central bank invested in the debt without their approval. Read more