Posts tagged 'Sovereign Debt'


All those San Francisco meetings paid off.

Franklin Templeton and other private creditors will agree to swallow a writedown on their Ukrainian bonds. Cutting a fifth off bond principal, it’s much less than many expected. Bond prices were rallying hard at pixel time.

Then there is the issue of Moscow. Since Russia’s said no about restructuring its own Ukrainian bond. Read more

Just another sovereign default

Another sovereign issuer started defaulting on its debt on Monday — treading a path well-worn by governments who run out of money.

This is Puerto Rico and the US muni market however, so the actual statement from its Government Development Bank, on missing a Public Finance Corporation bond payment, might make it appear as if things are different this time: Read more

No really, here’s how we’d restructure Greece’s debt, by the IMF

Here is another very strange, and short, document. Click to read.

It’s an update to the Greek debt sustainability analysis by IMF staff — yes one of those analyses again — which was originally published just before Greece’s July 5th referendum. Read more

Let’s talk about… the 1953 London Agreement on German External Debts

At length. Because haven’t you heard?

Germany is a hypocritical creditor.

It won’t give Greece the debt relief which it received itself in the 1950s.

Thomas Piketty said it. So it must be true:  Read more

How we would have restructured Greece’s debt, by the IMF

Here is an earnest, but very strange, document. Click to read.

It’s a Greek debt sustainability analysis by IMF staff. Yes, one of those analyses. A preliminary one, but in many ways the DSA to end all DSAs. Read more

Defaulting on the IMF: a stupid idea whose time had come

This belief — that an implicit official sector guarantee has quietly settled over every sovereign debt instrument issued by every geopolitically significant country on the planet — is a fallacy. The moral hazard implications of allowing this idea to prosper are staggering. More importantly, the official sector lacks the resources to make good on such an implicit guarantee, even if it wanted to do so.

– Lee Buchheit, ‘Sovereign fragility’, 2014

Coming home to roost now though, isn’t it? Read more

Dear Mme Lagarde

She’s a little busy with Greece at the moment. But just under two weeks after Christine Lagarde read the IMF equivalent of the riot act to Ukraine’s biggest bondholders over its debt restructuring…

They’ve responded. See below for the full open letter from Ukraine’s creditor committee on Wednesday: Read more

Sovereign default: how to do it in rhetorical style

The governments change, the debts change. The rhetoric, on the other hand…

In light of the Greek prime minister’s recent ‘humiliation’ speech and the rather heated reaction it’s had among official creditors (and private bondholders) – we thought we heard some historical echoes. So we took a quick look through the archives. Read more

IMF to Ukraine: take the red pill

It’s jargon-tastic and it’s come out of Washington DC late on a Friday, but do read this IMF statement on Ukraine’s debt restructuring. As Barnejek tweeted, it’s financial history in the making… Read more

Moratorium on Moscow?

On May 28, Ukraine will pay $88m in interest on its $2.25bn bond due 2022.

On June 20, it will also pay a $75m coupon on that $3bn bond owed to Russia.

Well, we say ‘will.’

This might get in the way first: Read more

And then there were four, Ukraine bonds edition

Back in April, five leading owners of Ukrainian bonds formed a committee to negotiate a restructuring with their debtor – and avoid losing money on their approximately $10bn principal in the process.

Now count the names in this release on Monday… Read more

The great Bonar caper

Are you an EM fund manager?

Do you live in London or New York?

Were you by any chance offered some of the $1.4bn of Bonar 2024 bonds issued by Argentina on Wednesday, bought by Deutsche Bank and BBVA on Thursday, and settling this Friday? Or maybe you’d like to buy these bonds in the near future.

Then congratulations. You might well also be buying yourself a ticket to the next exciting stage of the pari passu saga.

PS: this may now involve the holdouts personally hunting you down. Read more

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

Update: Seems we were right to regard this as curious…

Late on Thursday the IMF walked back on the idea the Russian bond is official debt, per ReutersRead 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.


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?


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…

 Read more

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)

 Read more

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