These are some mountains in Carinthia, Austria. Bucolic.
That, meanwhile, is the logo of Hypo Alpe Adria, a regional lender rescued by the Austrian government in 2009, and which has now sprung another, €800m black hole… and it is just possible that the name is going to be as memorable as Amagerbanken or SNS Reaal for European banks’ bondholders. Potentially it may be a less than bucolic precedent for sovereign debt, too. Read more
A useful chart from Citi on Thursday morning (which you may click to enlarge), on the recent rise in bank holdings of sovereign debt. Read more
Wait a minute, Doc. Ah… Are you telling me that you built a time machine… out of a sovereign bond contract?
– Marty McFly (paraphrased)
Imagine the next place to come under the new era of enforcing sovereign debt isn’t Argentina, or in the Caribbean, or even a future eurozone crisis. Imagine something… older. Much older. Read more
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
Noted simply because we didn’t know it existed before:
COMMONWEALTH INSCRIBED STOCK ACT 1911 – SECT 5
Limit on stock and securities on issue
(1) The total face value of stock and securities on issue under this Act and the Loans Securities Act 1919 at any time must not exceed $300 billion…
Here’s a list of the 144 Nays on last night’s House debt ceiling vote (so implicitly, then, 144 votes to find out how long the US could have gone before defaulting). Click to enlarge.
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
There are a few ways to greet the news that eurozone banks are more exposed to their sovereigns than ever. One’s to note that this just means more human shields to deal with (somehow) in a restructuring… Read more
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
Every Federal reserve bank shall have power…
…To buy and sell in the open market, under the direction and regulations of the Federal Open Market Committee, any obligation which is a direct obligation of, or fully guaranteed as to principal and interest by, any agency of the United States.
– Section 14.2(b)2, Federal Reserve Act
Now, reading that carefully…
Does that mean the Fed can’t buy defaulted US government debt? Read more
This is what a real T-bill crisis looks like. Just so we’re clear.
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
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
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
If you really, really want to see the US Treasury’s final rule on its issue of floating rate notes (from the beginning of next year, using 13-week T-bills as a reference rate) — here.
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
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
There’s one thing about how the Qataris have gone about protecting their $5.5bn or so lending in Egypt — and it’s a small thing, next to a coup d’etat, the swift exit of the chap they’d bet on, and a looming balance of payments crisis…
But it’s a familiar thing:
Yes, it’s time for a trip back into those Cypriot debt contracts.
Cyprus announced the results of its sovereign debt restructuring on some €1bn of domestic-law bonds earlier this week. The one the Troika wanted for — OH. Oopsy-daisy. Did FT Alphaville say sovereign restructuring. We meant “debt management operation”. Read more
FT Alphaville had expected to report the triumphant acquisition of almost 10 per cent of the Greek bond market by a single, little-known investor on Monday. As per the original July 1 deadline on Japonica Partners’ unusual offer to bondholders.
A pleasure denied: Read more
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
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
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
The Bank for International Settlements says there’s a problem. Governments, by and large, haven’t done enough to address the issues that have emerged during/since the financial crisis. Some monetary policymakers have done rather a lot, but much of it is in unchartered territory and carries risks. So, says BIS, monetary policymakers should just stop it henceforth.
From the latest BIS annual report: Read more
What to make of the 7 per cent levy which Hungary is imposing on bank holdings of local government debt?
This is debt that is being assumed by the central government. So, it was curious to see the government insist on Tuesday that its $219m tax collection isn’t a hidden write-down. (We should in any case preface this post by noting that Hungarian bonds have been bullet-proof lately.) Read more
And so FT Alphaville comes across “TENDER OFFER MEMORANDUM — INVITATION FOR TENDER IN RESPECT OF BONDS OF THE HELLENIC REPUBLIC”: the official launch of Japonica Partners’ eye-catching attempt to buy up to 10 per cent of Greece’s restructured bonds, in a kind of Dutch auction.
And there’s one very important point here. Read more