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Anna Gelpern
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The trouble is, goofs are orphans.
DebtCon4 (aka the 4th Interdisciplinary Sovereign Debt Research and Management Conference) was all set to meet at the European University Institute tomorrow ... then #2020 tried to one-up snowzilla. But DebtCon does not quit--certainly not when exports crater, inflows turn... Continue reading
Posted Sep 6, 2020 at Credit Slips
Argentina's capacity to trigger outrage in sovereign debt circles is to behold. After nine defaults, thousands of lawsuits, and enough intrigue and screaming matches to break Big Data, wouldn't you think that someone somewhere would learn to yawn at another... Continue reading
Posted Jun 9, 2020 at Credit Slips
Lest anyone thought they could quarantine or protest in peace, no such luck in the sovereign debt world. Remember when everyone thought a standstill starting May 1 was a great idea, at least through the rest of 2020? For all... Continue reading
Posted Jun 8, 2020 at Credit Slips
Delivering pandemic-fighting resources through debt relief channels poses at least three overlapping implementation challenges--no bandwidth today, Groundhog Day tomorrow, and inter-creditor equity forever--in addition to the challenge of monitoring the use of proceeds I flagged in Part I. I sketch... Continue reading
Posted Apr 20, 2020 at Credit Slips
A sovereign debt standstill might not cure COVID-19, but it sure seems like the one thing we can all agree on. In the run-up to last week's all-virtual IMF-World Bank-G-20 meetings, a chorus of private and public sector, NGO, think... Continue reading
Posted Apr 20, 2020 at Credit Slips
Further to Mitu's post about the European Central Bank's bond-buying bellyache, let us linger on the rationale for the 33.33% limit on the central bank's holdings of a euro area sovereign bond series. In the middle of the Greek sovereign... Continue reading
Posted Mar 24, 2020 at Credit Slips
Methinks necessity is a stretch. The majority and the concurrence seemed to go out of their way not to take the necessity/exception bait thrown at them by the parties. The majority's use of purchasing power and the government's own gold measures is weirdly mechanistic and circular -- the plaitiffs had no claim for damages because they had no use for gold (the government banned it) and because they did not lose purchasing power (deflation). Meanwhile, the concurrence would not choose between contact power and money power. Both boil down to sovereignty. If you have sovereignty, who needs necessity? (Compare Blaisdell and latent police power of the states.) To be sure, Perry and co. were big in Argentina - -- maybe bigger than in the US. This book is an awesome comparative overview of different approaches to emergency, economic and other -- useful context for the Depression-era US cases:
Imagine sovereign debt without Argentina -- no Paris Club, no pari passu, no CACs, no SDRM ... even sovereign immunity might look totally different. History teaches that whatever happens in Argentina's imminent bond restructuring (revisiting, reprofiling, rejiggering, revamping --the difference... Continue reading
Posted Nov 5, 2019 at Credit Slips
DebtCon3, the Third Interdisciplinary Sovereign Debt Research and Management Conference, is starting in just a few hours at Georgetown Law. This year's DebtCon takes place in parallel with IMF and World Bank Spring Meetings. When we first launched the DebtCon... Continue reading
Posted Apr 11, 2019 at Credit Slips
This is an important intervention about a massively important topic that comes up over and over again in sovereign restructurings, and will come up in more and more interesting ways in the next few years. Short version here. Continue reading
Posted Feb 25, 2018 at Credit Slips
Venezuela is really really careening sideways into chaotic default. We know this not just because it has been missing payments and the ISDA Determinations Committee said so, but also because the government seems to be in a hurry to hand... Continue reading
Posted Nov 26, 2017 at Credit Slips
Quite apart from the law... Neither Greece nor PR should be viewed as a fully sovereign debtor when it comes to restructuring. The local law move in Greece was coordinated with and blessed by the euro area powers that be; they also took default on the holdouts off the table. Similarly, the question of why PR did or did not use all its legal leverage, whatever it might have been, boils down to DC politics. The Recovery Act episode 1/suggests that there was not much leverage, and 2/confirms that in practice, this is a federal show.
Bond pricing has always been a puzzle to me, so I leave it to Mitu. But one thing has bugged me for more than a year. Ever since Venezuela has joined the ranks of the walking dead, market participants have... Continue reading
Posted Oct 11, 2017 at Credit Slips
We are about to hit an anniversary of sorts, a year since Venezuela was surely going to default on its debt ... except that it still hasn't, so the U.S. government has decided to nudge it along. Retroactive debt sanctions... Continue reading
Posted Sep 12, 2017 at Credit Slips
Mark's postscript strikes me as exactly right: the longer we stick with the presumption of separateness, the higher the risk of borrowing by US subs for the benefit of the mother ship, which structurally subordinates Crystallex ... except that the entire corporate structure soon starts looking like the sovereign's alter ego ... and the enforcement gambit starts looking like the conventional sovereign game: nuisance value overtakes marketable asset value.
Last time on Super-Sad Updates, I speculated (i) that the Venezuelan people could be in for more suffering and bondholders for more coupon payments (see Romania), (ii) that Venezuela’s complex debt stock was prone to shell games and inter-creditor conflicts,... Continue reading
Posted Aug 6, 2017 at Credit Slips
Market and civil society observers have taken Venezuelan debt restructuring as a certainty for more than two years, putting it in contention for the world’s slowest train wreck and quite possibly the messiest. Designs abound, but even after last weekend’s... Continue reading
Posted Aug 3, 2017 at Credit Slips
Midnight came and went with no news of a debt deal in Puerto Rico, and no extension of a stay on creditor enforcement under PROMESA. It sure looks like we are careening into an actual sovereign-ish bankruptcy-ish filing under Title... Continue reading
Posted May 1, 2017 at Credit Slips
On CACs - heck yes.
Toggle Commented Apr 20, 2017 on Ukraine's Loss: A Skid, Not a Crash at Credit Slips
Dear Par in Parem, Thanks for your comment. Sure, Russia retains all the leverage that a creditor would have under a defaulted sovereign debt instrument, including discovery and random attempts at grabbing assets, minus a pari passu injunction. However, I think it would be a mistake to focus too closely on this bond. What the court has done so far is kept the $3 billion claim fully alive as part of the grand bargaining process between the two countries. That is Russia's best leverage--blocking Ukrainian exports, energy supplies, tanks, seized property, etc. As an aside, Russia might be careful about overplaying its litigation discovery card because it might not like some of the information that comes to light as a result. Who knows.
Toggle Commented Apr 20, 2017 on Ukraine's Loss: A Skid, Not a Crash at Credit Slips
Mark posted a lucid analysis of Ukraine's loss to Russia in London yesterday (full 107-pp opinion here). The case will surely be appealed, and will drag on for a while, alongside the many other legal, political and military disputes between... Continue reading
Posted Mar 30, 2017 at Credit Slips
Adam, yes but that is not enough. There is a hoot load of neither-debt-nor-equity hybrids. There is even some contingent debt. Even the interwar German reparations debt had a contingent piece (they called it postponable annuities). So why not this variety? My hunch is that it has something to do with how little certainty this buys you in a world of so much jostling ex post. Cate is always incredibly well-informed, and GDB is a mess to be sure, but the zillion dollar question is precisely what is covered by "most," and who is really "senior." Alas, our tasker from Melissa was what to do without Congress. I would prefer a comprehensive legislative fix, but am not holding my breath. I therefore have some sympathy for Champerty's point, which I take to be that high-risk investments are, well, risky. As for Ukraine ... it's all about contract interpretation, where reasonable English lawyers will surely differ in the most gratifying ways. I should be glad to have the spotlight off the Second circuit... Thanks very much for your kind and thoughtful comments!
It has been a humbling torrent of creativity, and I am honored to chip in a tuppence at the eleventh hour. After an existential preface, I consider how one might use (or resist using) federal credit enhancement in the inevitable... Continue reading
Posted Mar 11, 2016 at Credit Slips
Think of all the cash that can now be invested in distressed Puerto Rican, Venezuelan, and [name your distressed debtor]'s bonds ...