When governments write contracts: Policy and expertise in sovereign debt markets

Weidemaier, W. Mark C.; Gulati, Mitu; Gelpern, Anna

doi:10.1017/cbo9781316442876.003

Cited by 4 publications

(4 citation statements)

References 23 publications

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“…With the global retreat of external debt markets, debt issuances came to a halt and CFBs lost their dissuasive authority on defaulters (Jorgensen & Sachs, 1988). We also know from prior research that legal recourses like collective action clauses (CACs) or gold clauses did not perform as expected by creditors because the interwar context was too thinly legalized (Weidemaier, Gulati & Gelpern, 2016).…”

Section: Debt Disputes In the Age Of Financial Repression: Whenmentioning

confidence: 97%

Rethinking Sovereign Debt from Colonial Empires to Hegemony

Pénet¹,

Zendejas²

2021

Sovereign Debt Diplomacies

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This descriptive chapter identifies the available narratives on the evolution of sovereign debt across the four historical clusters we have chosen to examine and show how this volume updates and complements existing research. Consistent with the diplomatic framework outlined in the introduction, we survey patterns of similarities and differences between clusters in terms of risk analysis, legal clauses, bargaining power, and conceptions of state responsibility. Our periodization will not surprise the reader inasmuch it broadly conforms to the conventional reading that the Great Depression and the collapse of the Bretton Woods system in 1971 were two critical junctures that deeply altered the form of creditor–debtor interactions in the sovereign sector. Yet, as we show below, this volume also makes substantial amendments to this conventional story. First, our focus on colonial history from the nineteenth-century building of empires to postcolonial transitions allows to diversify and identify discrepancies in the available narratives on each periods. Second, our attention to colonialism leads us to pay sustained attention to debt disputes arising during the postcolonial transitions of the 1960s–70s, a cluster of defaults which has not received sufficient scholarly attention. As explained below, our proposal to jointly analyse the historical threads of sovereign debt and colonialism allows for revisiting certain well-known cases of debt disputes and to examine previously unknown or little known events. The last section of this chapter presents the general organization of the volume as well as the list of selected case studies.

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Section: Debt Disputes In the Age Of Financial Repression: Whenmentioning

confidence: 97%

Rethinking Sovereign Debt from Colonial Empires to Hegemony

Pénet¹,

Zendejas²

2021

Sovereign Debt Diplomacies

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“…145 In doing so, however, this approach creates a number of new problems. 146 First, ratable payment injunctions endanger restructuring incentives for sovereign creditors by aggravating the classical prisoner's dilemma problem that affects them. 147 Second, enforcing sovereign debt through injunctive remedies shifts costs and burdens to innocent third parties.…”

Section: A Adjudicating Sovereign Debt Disputesmentioning

confidence: 99%

“…165 As an equitable remedy, public interests and collateral costs for third parties are especially relevant in considering the use of injunctive relief. 166 With a new administration at the helm, Argentina demonstrated good faith in quickly putting forth a reasonable settlement offer. 167 If Argentina's publicly stated defiance of court orders was a primary driving force behind the injunctions, perhaps Argentina's good faith efforts towards a negotiated settlement would be cause to reconsider the NML injunctions.…”

Section: Ratable Payment Injunctions Versus Negotiated Settlementmentioning

confidence: 99%

Settling Sovereign Debt's 'Trial of the Century'

Cruces

Samples

2016

SSRN Journal

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NML v. Argentina, the "trial of the century" in sovereign debt, is finally poised for settlement negotiations. International experience, incentives for the parties themselves, and even statements by the presiding federal judge, all suggest that it is high time for a settlement between the parties. However, major challenges remain. In this Article, we analyze a subset of the key economic and legal factors underlying this litigation, with a particular emphasis on issues relevant to a potential settlement. We document the wide heterogeneity of holdout rates across Argentina's 150 defaulted bonds (of which seventy-four still have holdout rates greater than five percent) and focus the subsequent analysis on the seven most held-out bonds-which have holdout rates between twenty and eighty-two percent and account for about thirty percent of total holdout principal. We show that New York's statutory real rate of interest on overdue interest has been 6.6% on average during the years affecting this suit compared to 3.1% during the previous forty years. As such, this rate has become more punitive than compensatory. We also illustrate the growth of the value of holdout claims for the seven bonds from their initial $1.7 billion in principal up to $4.3 to $7 billion in current value, depending on when holdouts obtained judgments. We analyze the sensitivity of holdout claims to different approaches to overdue interest-an issue that has become increasingly controversial in New York state law in recent years. We next assess the returns that investors would have obtained by purchasing the seven-bond basket at different times since 2002. We find that investors would have multiplied their money an average of eight times if

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“… 4 For good general coverage of this litigation, see Joseph Cotterill’s blog “Alphaville” in the Financial Times (https://ftalphaville.ft.com/) and Anna Gelpern’s blog in Credit Slips (http://www.creditslips.org/creditslips/GelpernAuthor.html), as well as Gelpern and Gulati (2013) and Weidemaier and Gelpern (2014). …”

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confidence: 99%

(Re-)writing markets: Law and contested payment geographies

Potts

2018

Environ Plan A

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While many emphasize the supposed frictionlessness and instantaneity of global financial flows, economic geographers have done important work placing globalization in concrete practices and spaces. Yet, cross-border payment transactions, which are constitutive of transnational markets, remain understudied. In this paper, I use creditor litigation against Argentina as a lens through which to explore material geographies of transnational financial payments. This litigation sheds light on the fundamental role of law (especially US common law) in structuring most major payment transactions today. Payment “flows” are not continuous at all, but rather legally divided into discrete spatial segments—and remapping these divisions, via litigation, has become a focal point of struggle between creditors and debtors, as well as among financiers. Fierce debates over contracts and their interpretation have been central in these battles. Furthermore, these financial geographies remain inextricably entangled not only with business actors, but with legal and political actors as well—law anchors economic geographies in state spaces and (often contradictory) state interests at a variety of scales.

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When governments write contracts: Policy and expertise in sovereign debt markets

Cited by 4 publications

References 23 publications

Rethinking Sovereign Debt from Colonial Empires to Hegemony

Rethinking Sovereign Debt from Colonial Empires to Hegemony

Settling Sovereign Debt's 'Trial of the Century'

(Re-)writing markets: Law and contested payment geographies

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