Clauses & Controversies Mitu Gulati & Mark Weidemaier

El Salvador’s Warrants: Bukele’s Folly?

El Salvador has issued a new bond, using part of the proceeds to buy back some bonds that mature in the relatively near term. The issuance includes a detachable warrant that pays up to an additional 4% if El Salvador does not get an IMF program in place soon (or achieve a higher credit rating). The issuance has been characterized as a way to convince investors that El Salvador really is serious about striking an IMF deal. But the whole thing strikes us as loony tunes. Which is it? We ask EM guru Ben Heller.

Producer: Leanna Doty

The Latest in the Argentine GDP Warrant Saga: Drafting Goof or Sneaky Drafting?

There are so many intriguing aspects of the latest installment of the Argentine GDP Warrant Saga. This time, from Judge Preska in the SDNY, Argentina scores a big, and for us, totally unexpected victory. Argentina’s lawyers, at a very late stage, discovered a magic bullet that no one seems to have realized was there. Mark doesn’t like to use the term “contractual landmine”, but he does here. Mitu applauds.

Producer: Leanna Doty

Lessons from the 1980s Debt Crisis

The 1980s debt crisis began in Mexico and engulfed countries around the world, leading, via the Brady Plan, to the revival of the bond markets. Beyond that, we confess to relatively little knowledge about this fundamental episode in sovereign debt history. For so many of the leading lights of the contemporary sovereign debt world, the Latin American debt crisis was where they cut their teeth. The lessons they took from that era shaped the choices they made over the succeeding decades. Our guest is Jerome Sgard (SciencePo), who joins us to talk about his book, The Debt Crisis of the 1980s, which taps into new archival material and draws on interviews with many of the key participants. We ask Jerome about this key decade in the evolution of the modern sovereign debt architecture.

Producer: Leanna Doty

A Way to Use Frozen Russian Assets to Help Ukraine?

There has been much chatter lately about a proposal from Lee Buchheit, Daleep Singh and Hugo Dixon to address concerns in Western nations about using frozen Russian assets to get Ukraine much needed war financing. One might ask why these nations are so concerned about confiscating Russian assets when they have already frozen the assets, seemingly in perpetuity. But apparently, the difference matters quite a lot. Our guests, Ingrid Brunk and Paul Stephan, are two of the most thoughtful and careful thinkers about international law and they help us understand the virtues and pitfalls of this new, and very creative, proposal.

Producer: Leanna Doty

Ukrenergo Confusion

Rumor has it that holders of bonds issued by Ukrenergo, the state-owned corporation that runs Ukraine's electricity distribution system, expect to get better treatment in a debt restructuring, even though their bonds are guaranteed by the state and at least arguably can be forced to vote alongside holders of Ukrainian sovereign bonds (whose votes could swamp those of the Ukrenergo investors). Do the documents for the Ukrenergo bonds allow this? Or is there some other explanation for why holders of the corporate bonds expect better treatment. We are ... confused. Do not expect clarity.

Producer: Leanna Doty

Who Benefits from Lifting Sanctions on Buying Venezuelan Bonds?

Banning U.S. parties from buying Venezuelan bonds was probably a bad idea. But was it a good idea to lift the ban last fall? Investors apparently sold the Biden administration on the idea that lifting the ban would yield big benefits: bonds had migrated into the hands of parties acting as proxies for U.S. adversaries like Russia. Lifting the ban would cause the bonds to migrate back to U.S. investors, giving them (and, indirectly, the U.S. government) a seat at the table when a restructuring eventually happens. That was the story, anyway. But does it make sense? Or were investors selling the Biden administration a bill of goods, advocating for a policy change that would enrich them without doing squat to change the geopolitics of Venezuelan debt? Kejal Vyas (Wall Street Journal) has covered the machinations behind the policy shift, and he enlightens us about all things Venezuela.

Producer: Leanna Doty