Now that Cypriots have elected the guy who’ll have to negotiate how to pay for the costliest bank bailout in history (relative to the size of the economy on the world’s 81st-biggest island)…
He (and they) could do worse than look at these charts, courtesy of Gabriel Sterne at Exotix: Read more
Click to enlarge — details (finally) of the sovereign bonds held by the European Central Bank’s inactive Securities Markets Programme, released on Thursday: Read more
So, do you believe that “exceptional and unique” story about sovereign debt restructuring in the eurozone?
Then, as advised in a recent paper by Lee Buchheit, Mitu Gulati, and Ignacio Tirado — which we’re revisiting as Cyprus bailout talks heat up — stop reading here. Read more
So, you’re wondering what kind of crisis Cyprus is. And you’ve watched the success of Nicos Anastasiades in the presidential elections so far. Anastasiades is not the kind of guy to demonise creditors for the sake of it, but he will have tough negotiations ahead of him of he wins. Read more
Yes the IMF calls for common eurozone deposit insurance, in this new banking union paper. But also look at what they suggest on emergency liquidity assistance:
Lender of last resort. The lender of last resort makes liquidity support available to solvent yet illiquid banks. Centralizing all LOLR functions at the ECB would in the steady state eliminate bank-sovereign linkages present in the current ELA scheme (see Box 1). This would require changes to the ECB’s collateral policy, as by definition euro area banks that tap ELA cannot access Eurosystem liquidity owing to collateral constraints. Until such time as all banks are brought under the ECB’s supervisory oversight, ELA would be sourced through both the ECB (for banks brought under its purview) as well as national central banks (for banks that remain under national supervision, albeit with adjustments made to the national ELA limits).
Which would be nothing short of a revolution. Read more
If there is anything that qualifies as protesting too much, surely this is it…
The finance minister of eurozone country X declares (as Vassos Shiarly of Cyprus did on Monday) that its bonds/its banks’ bonds/their depositors simply cannot be written down. Why? Eurozone country X’s constitution and laws just don’t allow it!
Well, on the contrary. Read more
A familiar saga pops up in the prospectus for Paraguay’s recent US dollar, New York law bond…
A great resource from Shearman & Sterling, in their note marking the end of the briefing war in the Argentine vs holdouts pari passu saga.
It’s a schematic of the arguments which the Second Circuit will likely consider when deciding appeals against an order for Argentina to pay holdouts alongside restructured bondholders. Some of the arguments are key. Some are not so key. Read more
And why this could well have been the best possible deal for Ireland.
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Click for the feed from the Irish parliament, where legislators have until the morning to pass an emergency bill liquidating Anglo Irish’s resolution company, unlocking a promissory note deal which might be on its way, before creditors of Anglo hit the LITIGATE button. Or something. (The entire prom note deal is needed by the Irish government before the notes’ next circa €3bn interest payment, because that’s what they promised the public.) Read more
*NOONAN SAID TO PLAN ANGLO IRISH SPEECH IN PARLIAMENT
A few hours later… Read more
At times, pursuing a defaulted sovereign debtor for full payment can almost (almost) come across as a facetious exercise. As when NML’s latest brief in the Argentine pari passu case quotes Casablanca. Read more
Holdouts’ opposition papers in the Argentine pari passu saga had just landed at pixel time on Friday. Here’s the one from NML itself, and here’s the one from other holdouts including Aurelius Capital.
We’ll try to do a proper take later on what the briefs say, but first, we thought we’d devote this post to some context on where the litigation is going as well. Read more
It’s Andreas Georgiou, the head of Greece’s independent statistics agency, Elstat.
According to the list of emerging and frontier sovereign debt covered by the specialists at Exotix (and Exotix cover a lot) the 10 per cent foreign-currency yield might be dying out (click to enlarge):
We saw this coming from the IMF all the way back in March 2012 — when Greece’s PSI was just over, and vague notions of OSI were already in the air. Read more
An IMF working paper by Serkan Arslanalp and Takahiro Tsuda published last month runs through just how big the exposure is of advanced economies to foreign official debt holders (governments, central banks and the like).
As the authors write, holdings of sovereign debt by the foreign official sector are important, because shifts in the sovereign investor base can affect government borrowing costs and refinancing risks. The composition of sovereign debt holdings can also reveal a vulnerability to bank-sovereign linkages.
So far, so familiar. But stay with us. Read more
H/T to Martin Malone of Mint Partners for this vivid illustration of how the differential between “core” and periphery sovereign yields has tightened. Read more
Portrait of a returning peripheral sovereign, encore:
Speaking today, NTMA Chief Executive John Corrigan said that Ireland had made considerable progress in its phased return to the markets over the past year and, with the success of yesterday’s €2.5 billion syndicated bond sale, had eliminated the “funding cliff” presented by a €11.9 billion bond repayment due in mid January 2014. The NTMA intends to step up its re-engagement with the market during 2013 so that Ireland is positioned to successfully exit the EU/IMF programme. Its working plan is to raise €10 billion, subject to market conditions, of which one quarter has been achieved with yesterday’s bond sale. Mr Corrigan also said the NTMA would continue its regular auctions of short-term Bills, which recommenced in July 2012, with the first 2013 auction scheduled for Thursday 17 January. Read more
You know them when you see them, obvs.
Applying that rule of thumb… Read more
If you thought the Argentine pari passu bond saga had taken the holiday dead period off — then you don’t know the pari passu saga very well.
Some interesting developments squeezed in before the new year… Read more
Take one warship rescued from asset seizure by bond holdouts.
Add swelling music, defiant rhetoric by President Cristina Fernandez de Kirchner, the national flag stirring in the Atlantic breeze, and messages home from crewmen who remained on board while the dispute played out in a Ghanaian port and Hamburg tribunal… Read more
An unlikely beneficiary of the fiscal fudge, perhaps. Here’s Spanish 10 year paper, the yield on which was threatening to drop back below 5 per cent on Thursday. Read more
And so an Argentine training warship is free to sail off into the sunset, and out of the clutches of bond holdouts.
A riddle, wrapped in a mystery, inside an enigma, inside a pari passu clause.
Here are some terms from Italy’s 2015 US dollar bond, which it issued under New York law in 2010. It is a pari passu clause, even though you won’t find the words ‘pari passu’. Read more
On October 26, the Second Circuit chucked out Argentina’s appeal against having to pay bond holdouts, having had “little difficulty concluding” that the defaulted debt’s dusty, old — but contractually standard — pari passu clause demanded rateable payment. Read more
And so ends a little saga-within-a-saga in the Argentine bond holdout case (but one which shed interesting light on the various sides’ litigating strategies). Read more