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

Look ma, no uniquely recalcitrant sovereign

Exciting. There’s now a whiff of political glasnost surrounding Argentina’s pari passu saga.

Or not exciting. The saga might just get two years of a lame-duck president waiting to pass the holdout problem onto the next occupant of the Casa Rosada. (The Second Circuit also denied requests to lift the stay on the order for Argentina to pay holdouts on Friday, so we know the litigation is going to go on a bit longer.)

But that makes it all the more interesting to reconsider those recent, rather odd, whispers of a plan for Argentina’s restructured bondholders to go around the sovereign that really, really doesn’t want to pay — and make a deal for Elliott and co to go away themselves, dropping the demand of ratable payment from the Republic. Read more

Stay, go, pay, pari passu

In which, regardless of recent calls on Argentina to negotiate on an amount to pay its holdouts in the pari passu case (or is it to give those calls teeth?)…

…Ted Olson, NML Capital’s lawyer, invites the Second Circuit to unfreeze an order to pay the holdouts ratably — and in full, by the terms of their defaulted bonds — at the next payment to restructured bondholders. Click for the doc. Read more

Argentina tries to settle with holdouts. Not those ones though.

Beyond the Supreme Court, Judge Griesa, and Elliott Associates’ own (rather remarkable) media offensive telling Argentina to talk before the pari passu screws turn…

It comes down to the Republic’s own incentives to settle. Especially when it’s been such a “uniquely recalcitrant” debtor for so long.

And so — while it might seem a long way from the pari passu saga — we’re interested in this week’s news (via Ambito) that Argentina wants to pay $500m (in bonds) to settle with five companies and get them to stop suing it through ICSID, the World Bank’s investment arbitration tribunal…

Change in the air? Change which might spread to NML v Argentina? Read more

Pari passu, Supreme smackdown (sort of)

From the Orders of the Supreme Court on October 7:

This is a defeat for Argentina. Any legal setback is. But it’s also perhaps not the end of the prospect (however distant) of Justices Scalia, Ginsburg et al debating the pari passu saga. Read more

Swap ye not Argentine bonds


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

Argentina’s pari passu upset — redux

Got a problem with Argentina being made to pay holdouts alongside its restructured bondholders?

Reckon it might happen to your sovereign (even if Argentina is apparently a “uniquely recalcitrant” debtor) and screw up its next debt restructuring?

Deal with it, says the Second Circuit of the United States Court of Appeals: 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

Pari passu — tussles in Brussels

It’s really starting to feel like Groundhog Day waiting for the Second Circuit to make that final decision in the Argentina case. It’ll provide answers on the form of ratable payment to holdouts, the risk to those all-important third parties, and the question of enforcing the payment injunction outside the US.

There have been some distracting moves in the Belgian wing of this saga in the meantime, however… Read more

The negative pledge saga?

There’s one last crossover to consider between Grenada and Argentina in the current pari passu saga.

Here we might be getting slightly further into the future of sovereign debt litigation. But it’s equally important for the IMF and other keepers of the system to keep an eye on, we think.

It just happens to involve a different piece of bond contract… 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

Welcome to Belgium. Please pari passu carefully

Spotted on Tuesday… the pari passu saga that started in the US courts crosses another border. Belgium:

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Pari passu’s peso problem?

UPDATE (Friday) – Judge Griesa said he won’t comment on Citibank’s request, at least until the Second Circuit’s final ruling on objections to the form of his order:

Citibank asserts that it needs clarification as to its obligations in the event that the Court of Appeals affirms the District Court’s November 21,2012 rulings. The District Court declines to make any further comment on matters now before the Court of Appeals. What further ruling or action is required from the District Court will obviously depend on the holding from the Court of Appeals. No more can be said at this time.

Now back to Thursday’s original post for the stakes involved…


Hat-tip to Bloomberg — it looks like we have a new entrant in the pari passu saga.


Technically it’s Citibank’s Argentine branch. They’ve made a slightly curious request for ‘clarification’ of Judge Griesa’s order last November for Argentina to pay bond holdouts alongside other, restructured creditors. (Payments just to the latter could be seized, and ultimately launch Argentina into a sovereign default… just to catch you up.) 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

Argentina and an offer easily refused

With its latest submission in this Court, the Republic of Argentina continues its long and consistent pattern of defaulting on its contractual obligations, defying the laws of the United States (which its contracts expressly invoked), and showing contempt for the courts to whose jurisdiction it unreservedly submitted. The government of Argentina plainly believes the rule of law does not apply to it…

Guess that’s a no, then. Read more

The pari passu saga, catch up quickly video edition

A short video to catch up on Joseph’s pari passu saga. We hope you enjoy.

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

Update (4 April) – The Second Circuit has ordered NML to respond to the Argentine proposal by April 22. Which is as expected but more time on the clock for the Republic.

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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

Argentina en banc? Mais non

Guess it pretty much comes down to the alternative ‘formula’ for paying its holdouts which Argentina will be making to the Second Circuit at the end of this week, then.

The court on Thursday denied the government’s separate request to have its pari passu case reheard ‘en banc‘ — that being when a full court hears your case, instead of a panel of judges (which is usual): Read more

And the beat goes on, pari passu and sovereign restructuring edition

They’ve become interesting side-players in the saga principally starring Argentina — so it’s probably worth noting the latest from these two Caribbean sovereigns…

Belize has closed its restructuring with 86 per cent approval by its creditors: 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

Raising the RUFO in Argentine bonds

In case you didn’t fancy ploughing through our 3,000+ words on NML v Argentina last week at the Second Circuit…

Barclays’ analysts have boiled down the next turning point in the pari passu saga into two paragraphs, in their March 5 note (irresistibly titled ‘Cram-down or sanctity of contract? Is there a way out?’): 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

Give us a formula, Argentina

We haven’t written up our full take on Wednesday’s (nuts) oral argument in NML v Argentina (sorry), though you should read this, just out from the Second Circuit on Friday…

The court has ordered Argentina to specify “precise terms” of how it would wish to pay holdouts, differently to the current injunction to pay them ‘ratably’ in full: 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