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
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
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
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
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
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 Reuters: Read more
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
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
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
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