Posts tagged 'Sovereign Debt'

Is Ukraine’s Russian bond ‘official’ debt or not?

Still in any doubt that Ukraine — and specifically, the bond which Ukraine owes to Russia — will be a very tricky sovereign debt restructuring?

And so to the regular IMF press briefing in Washington DC, conducted earlier on Thursday by William Murray, fund deputy spokesman… Read more

Ukraine’s bonds: a little local leverage

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.

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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

Stopping a Russian bond invasion

All it took was 11 days — and one schtum Kremlin spokesman — to make people wonder recently just how strong and secure a ruler Vladimir Putin really is.

They might want to look inside his Ukrainian bonds next. Read more

An Argentine bond reprieve — or is it?

Could there finally be a limit to just how far around the world the pari passu saga goes?

No.

But for a longer answer, read on. Read more

Bund cookies

In its implementation of the PSPP, the Eurosystem intends to conduct purchases in a gradual and broad-based manner, aiming to achieve market neutrality in order to avoid interfering with the market price formation mechanism…

‘Implementation aspects of the public sector purchase programme’, European Central Bank Read more

Greek funny money: no thanks

Does money have value because the state says it’s money, or because the population trusts that it’s money?

It’s a great, perennial question. It’s also really not one Greece wants to find the answer to right now.

The question comes up reading yet another proposal for Greece to use a parallel currency so it can fight with its creditors without leaving the euro. So, coming fresh after Wolfgang Munchau’s appeal for Greek IOU issuance last week, Paul Mason has resuscitated “future tax coin”Read more

Pari passu: the English patience

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?

A. Politely.

Click below for the attempt of Mr Justice David Richards of the High Court of England and Wales: Read more

Rebranding Troikas, then and now

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

Just in case Grexit were to happen…

Eric Dor of the IESEG School of Management in Lille has a handy table. Click to enlarge…

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From Russia with bonds

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.

Because the President of Russia certainly hasn’t forgotten about it — or the unusual clause inserted into the language of a $3bn bond Ukraine owes to his government: Read more

Guest post: The case for sovereign reprofiling the IMF way, part two

‘Reprofiling’ is a controversial word in the world of sovereign debt at the moment. The IMF is gathering responses on a proposal to extend bond maturities when a country’s debt looks like it might be unsustainable going into a programme.

In this post, having reviewed criticisms of the proposal, Lee Buchheit, Mitu Gulati and Ignacio Tirado discuss how reprofiling can be designed to avoid hostility from creditors. Read more

Guest post: The case for sovereign reprofiling the IMF way, part one

‘Reprofiling’ is a controversial word in the world of sovereign debt at the moment. The IMF is gathering responses on a proposal to extend bond maturities when a country’s debt looks like it might be unsustainable going into a programme.

In this post, Lee Buchheit, Mitu Gulati and Ignacio Tirado review criticisms of the proposal — and suggest some responses. Read more

Guest post: IMF policies in the next crisis – unsuitable with a high probability

It’s that time of year again for the IMF-World Bank annual meetings in Washington – which means time for reflection on the fund’s attitude to changes in sovereign debt restructuring. Gabriel Sterne, Head of Global Macro Investor Relations at Oxford Economics, argues why it might be time for less procrastination, and more ‘forward guidance’…

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Ukraine — call the sovereign debt cops

. . .Which is an announcement by the Ukrainian Security Service on Thursday that it has opened an criminal investigation into just how Ukraine managed to sell $3bn of some curious bonds to Russia in the last months of Viktor Yanukovych’s government. Read more

Second Circuit still not Argentina’s biggest fan

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

Ukraine, war, and sovereign default

Ukraine claimed at pixel time to have fired on a number of Russian tanks crossing its borders.

Being invaded by Russia is not very conducive to a country’s GDP. But also, bizarre as it seems if its armour really is aflame in the Donbas, Russia is also the owner of Ukrainian sovereign debt. This has some precarious terms (for the borrower) restricting growth in debt to GDP to below 60 per cent. Read more

Investment in Argentine bond credit-linked notes ends less than perfectly

See the attached for an important announcement by the Brasil Sovereign II Fundo de Investimento de Divida Externa… (H/T Bloomberg)

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No, really — does anyone want to accelerate on Argentina?

It is getting to a week since holders of Argentina’s restructured bonds first had the opportunity to cry default and demand full and immediate payment. So we thought we’d ask.

And as Morgan Stanley’s analysts pointed out on Tuesday, there is $13bn of paper out there eligible to be accelerated — $30bn, counting cross-default clauses in debt which has not had payments missed yet. Read more

Argentina, default, and the prisoner’s dilemma

That was the Argentine economy minister, Axel Kicillof, shortly before pixel time, having announced a (rejected) ‘offer’ of the same terms as Argentina’s restructured debt to the holdouts; blamed Judge Griesa; and otherwise prepared his country for default. Direct negotiations, in short, are over for now. Read more

The get out of RUFO free card

Update – Midnight UK time: Argentine press was reporting at pixel time that the country’s banks may provide collateral to the holdouts for a temporary stay. Argentina would then use the stay to ask restructured bondholders to consent to waiving the RUFO clause. (Using private banks to pay the collateral would avoid a RUFO trigger.) Also at pixel time, Argentina’s economy minister had entered negotiations in New York — so something was up.

The talks may move quickly into Wednesday. But the emergency stay request in the original post below shows some of the issues here… Read more

Rearranging the ISINs on the Titanic

We are one day away from Argentina’s second default this century. Drama or farce?

Farce. For all the confusion that was on show in Judge Griesa’s hearing last week, about whether Argentina’s restructured local-law bonds should join the foreign-law debt within the pile of paper at risk…

At least holders of these bonds will be OK after all on Wednesday.

Only just this once, though. And they were let off for a reason which underlines tensions we’ve been noting in the pari passu saga between enhanced powers to enforce sovereign debt, and the complexity of international finance. Read more

Exorbitant privilege, meet pari passu

With less than a fortnight until Argentina risks defaulting on its restructured debt, there will be another hearing in the pari passu saga later on Tuesday. After a look at Argentina’s position, now for what Judge Griesa’s hearing will focus on — restructured bondholders who argue that he has no jurisdiction over them…

Notably, local-law restructured bondholders. Read more

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

We are negotiating. You are litigating. They are going for the eyes

“The recalcitrant scum of the earth, I believe?”

“Ah, the vultures of global usury, I presume?”

To commemorate the beginning of negotiations in New York later on Monday between Argentina and Elliott… Read more

A letter to Judge Griesa

Delivered by Cleary Gottlieb on Monday — and freshly tweeted by La Presidenta. Click to enlarge: Read more

Pari passu: CDS interlude

Hat-tip to Joe Rennison at Risk.net, and Bloomberg — a mystery “CDS Holder” has asked Isda’s determinations committee to look at whether Argentina’s government could have potentially triggered CDS on the country during its confused responses to defeat at the Supreme Court last week…

The request — to extend a maturing CDS contract, hence the ‘potential’ language — centres on the economy minister’s statement last week that the judgment made paying the restructured debts “impossible”: Read more

About that Ukrainian bond Russia owns…

Russia says Ukraine hasn’t paid interest due June 20 on that $3bn eurobond.

Ukraine said on Thursday that it had. Read more

There goes the “no pasaran” plan

Here’s the order which Judge Thomas Griesa made late on Friday, forbidding Argentina from swapping its restructured bondholders from New York law to its local legislation… Read more

Sovereign debt reprofiling, take two — from the IMF

The IMF has picked its week to publish another paper on changing its sovereign debt restructuring policy…

Although the paper released on Friday — which follows an initial review last year — isn’t about Argentina, pari passu, and holdout issues. It’s about Greece. Read more

They shall not pass (but let’s try and reroute our bonds around them anyway)

We cannot allow that we are prevented from honouring our commitments to 93 per cent of bondholders. We are going to initiate a debt swap to pay the bonds in Argentina, under local legislation…

That would be Axel Kicillof, Argentina’s economy minister.

Late on Tuesday, Kicillof revealed the Argentine government’s actual plan for life after its final defeat in the pari passu case — a canje, or swap out of New York legislation into local law for its restructured debt, to avoid paying everyone (or no one) in New York as per the pari passu injunction.

If you can’t get the US courts to throw the problem out of your bonds, get your bonds away from US courts.

A flawless plan — if the US courts weren’t already furious with Argentina, and if the entities whose help the republic would need to organise a swap (lawyers, payment agents, and so on) weren’t subject to those courts. Read more