Gesamtzahl der Seitenaufrufe

Sonntag, 28. Oktober 2012

Konsequenzen für den Bondmarkt und die Holdouts nach dem pari passu Urteil des Court of Appeals // Werning JPMorgan

Konsequenzen für den Bondmarkt und die Holdouts nach dem pari passu Urteil des Court of Appeals // Werning JPMorgan

Argentina: Holdout creditors' "trick or treat" threat warrants cutting Argentina debt to MW in model portfolio

Holdout creditors score win in long awaited US Appeals Court "pari passu" ruling
Argentina likely to exhaust alternatives before considering compromise
Argentina's performing bond market can suffer further from "friendly", as well as "enemy fire"
Cut Argentina debt to marketweight in model portfolio

Hold out creditors litigating against Argentina in US courts have brought forward Halloween holiday this year. The "trick or treat" was issued via a US Appeals Court ruling which resonated negatively in bond markets. The problem for the market is that Argentina is being told to "treat" but performing debt bondholders are the potential victims of a (very nasty) "trick" if Argentina does not concede hand outs.

In this note we complete the thoughts that formed our immediate impressions in response the news of the adverse ruling for Argentina ("Argentina: Court rules pari passu—quick & dirty and negative"). In a nutshell, as we think about the details and possible scenarios our concerns over the risk this litigation poses to Argentine performing bond holders remains large.

This ruling is the key headline risk event that the market has been waiting for but the result is not what the market was expecting. Thus, it is negative for the soverign debt. Whether the risks are worth more than the $7.0-9.5 price gap in long-duration performing bonds that already transpired is the key question investors face.

We believe the market worries are unlikely to resolved for better or for worse in the near term and hence market anxiety may escalate. Given the legal complexities of the case and the fact that a politically-charged decision now lies unpredicatbly in Argentina's lap, we prefer to stay sidelined at this stage and recommend cutting Argentina exposure to marketweight (see last section below).

The ruling is very harsh, raising risks of an adverse "end game" for performing debt

With regards to the ruling there are many things to highlight. We abstract from an analyzing arguments driving the decision in depth (sufficient is to say that the Appeals Court literally trashed a laundry list of Argentina's arguments—with one caveat). The main take aways are the following:

1. The ruling AFFIRMS the judgements of the district court against based on breach of "pari passu" (i.e. issuing an opinion on the "broad" definition that serves establish precedents for sovereigns in general, not just the "narrow" definition based on argument of the "lock law" specific to Argentina).

For practical purposes, this boils down to disallowing Argentina to pay holders of restructured bonds in US territory unless it pays holdout creditors in the lawsuit (with claims worth $1.33 bn)—despite the payments are in a bondholder trust which technically means they are no longer property of Argentina. Specifically, this involves 2005 and 2010 Exchange Securities which we interpret to mean Discount, Pars, GDP Coupons and Global 17s under foreign law, which includes USD-denominated NY law and EUR denominated UK law securities; in contrast, bonds from those same exchanges but under Argentine law, irrespective of whether they are USD or ARS, are not affected as they are paid outside US jurisdiction).

2. The case is REMANDED to District Court so that two issues are clarified :(i.e. the "pro rata" formula and the injunction's application to third parties and intermediary banks) and then will be returned to Appeals court for FURTHER CONSIDERATION.

While this may generate a perception that the Appeals Court can change its mind if the District Court clarifications do not satisfy it, we doubt this is likely to happen. The pro-rata formula (while critical for all parties and potentially controversial) once defined is a technicality and it is unlikely to be scrutinized by the Appeals Court. We suspect that the clarification regarding financial intermediaries can be resolved if a definition is narrowed in a way that institutions are unaffected when they (a) are in the chain of payment for Exchange Securities that do not directly recieve proceeds from Argentina or in trust for bondholders (but caught somewhere between) or (b) involved in transactions unrelated to Exchange Securities being targeted (for example, a payment of a different bond)

3. The ruling does not mention the stays on the injunctions that the District Court concended to Argentina for the purpose of allowing it to proceed with its appeal.

The lack of reference to the 'stays' raises a valid concern that if a solution is not adopted quickly by parties involved, the District Court injunctions and the Appeals Court affirmation would already apply to upcoming coupons on Exchange Securities due in December of 2012 (Discounts and GDP warrants). The worry is that without stays a potentially defensive and hasty political response from Argentina might surface, irrespective of the collateral damage to the bond markets it may entail. However, we believe that—with the remend requested and with Argentina sure to seek a "certioari" of the US Supreme Court—it is more likely that the threatening remedies will not be enforced until the judiciary process is complete (which, given court timing, inclines us to think that December 2012 coupons will be paid as usual). In fact, Argentina's Secretary of Finance Cosentino addressed this issue in a public statement, ratifying that the "stays" are in place currently.

Next steps: The ball is Argentina's (better said, Cristina's) court

The end game in this litigation will depend on Argentina's response. Below are some thoughts on the path ahead and a lot of concerns over the political capacity of the government to find a solution that limits collateral damage to the bond market:

1. Argentina can choose abide by the Courts and settle with hold out creditors the claims. Litigation claims ($1.33 billion) can be settled without affecting Argentina's broader payment capacity (and hence the risk premium on Argentina performing bonds). Argentina can dip into its $45 billion of reserves to make the payment as it currently does for performing debt service.

However, there are economic and a political factors at play that make this unlikely: On the economic side, we note that there are a total of $6.6 billion untendered debt (litigating and non-litigating), mostly foreign law, that could "piggy back" on this ruling to demand similar compensation. And considering that Argentina's definition of claims is limited to principal (but plaintiffs could demand PDI since 2001) the liability can conceivably inflate to an figure in the neighborhood of $11-12 billion. So it is not clear that a "small" $1.3 billion payment (or some lower amount settled privately between plaintiffs and Argentina) closes the door on the issue.

Political considerations are more worrisome. In our view the alternative of settling claims with litigating investors looks like a difficult pill to swallow politically for a government that has publicly blasted the "vulture funds" as public enemy No. 1 (but not exclusively so) of the Argentine people. We give a slim chance to this unless plaintiffs accept a similar deal similar to the restructuring exchange (which allows the government an elegant exit: selling the deal publicly as one that respects the terms of its own original proposal). Yet, should plaintiffs be expected to accept such a proposal after years of litigation? We are doubtful... but we (and bond markets) would be relieved to be proven wrong.

What could trigger an surprise compromise by Argentina? Maybe, the silver lining in the YPF nationalization is that now the government has a need for the state-run oil company to raise funds that help it fulfill the investment goals the President cares about. And maybe, the government acknowledges that it must resolve litigation uncertainty in a cooperative manner to make yields attractive for YPF and make its strategy to solve the energy imbalance feasible again. But too many "maybes"—and a leap of faith that the government will readily adopt economic cost-benefit analysis over political calculation—are involved in this vision for comfort.

2. Argentina is sure to appeal (or seek "certiaori"): Argentina's public statements (from Secretary of Finance Cosentino) in response to emphasized that the latter "is not the end of litigation" making it clear that the next step is to seek a judiciary review of the ruling. What is not clear is if Argentina will appeal immediately or wait for Judge Griesa to resolve on the clarifications required by the Appeals Court.

We understand that an Appeal can be made by Argentina to an expanded Appeals Court before the sovereign would need to seek a "certiaori"  from the US Supreme Court. This again suggests that performing bond coupons are not immediately threatened. The clock on the threat to coupon payments on restructured debt starts ticking once the Supreme Court rejects the case or if it accepts it and subsequently affirms the injunctions. The Supreme Court might take 3-6 months to decide to take Argentina's appeal or reject it. So an appeal buys time and reduces the risk of a defensive and hasty response by Argentina that inflicts collateral damage.

A Supreme Court ruling could eventually overturn the Appeals Court. At the end of day, Argentina has already proven capable of doing so in other litigation also involving holdout creditors. Moreover, recall the US government did submit an Amicus Brief siding with Argentina on the (broad) interpretation of "pari passu" that might be taken into account (although the Appeals Court evidently brushed its relevance aside). Assessing those chances, however, is the subject of a different conversation that involves analyzing in detail the arguments supporting the ruling.

3. Argentina can try to re-route the payments on restructured debt: To avoid making payments in US jurisdiction Argentina might consider offering performing debt holders payment of coupons into a new offshore trust.

Legally, this is complicated to the extent that one of the orders of the judge requires Argentina not to modify its payment mechanisms for Exchange Securities. Evidently Argentina, in exercise of sovereignty, may attempt to do so anyway. Yet financial institions under NY law that facilitate such a scheme might be liable to being labeled in contempt of court and therefore Argentina would rely on other institutions to help it carry out such a plan.

But in addition, a successful execution would require solving some operational unknowns. We have heard opinions from legal experts that payment to the Trust in NY is "hard-wired" into bond contracts. If so, to re-route payments offshore (outside US) Argentina may need to carry out an exchange with current restructured debt holders. Yet an offshore payment would sacrifice US legislation and—while it is clear investors have an incentive to facilitate the payment of their coupons—it is not clear if they would rush to embrace a different legislation. Argentina can argue that a full payment in USD in Argentina should be viewed as superior to risk of payments being pro-rata in NY. But following all the noise around risk of "pesofication" we doubt all investors dependant on the BoNY trust structure have the appetite to make the gamble. A foreign non-US jurisdiction (UK?) might offer a (temporary?) shelter to continue payments but 100% participation in a swap of this kind has slim chances.

4. Argentina can unilaterally decide to set aside future coupon payments in an (offshore) trust as a display of willingness and capacity to pay, risking accusations of default. If Argentina does not want to play the cards it has been dealt within the established rules it may consider rewriting these rules in a convenient way. It might be deemed a political "face saver" to announce that it will deposit funds for Exchange Securities in a separate offshore trust that respects restructured bond holders claims but defies litigating creditors claims and US court orders to pay them pro-rata.

This option would lead to further collateral damage in bond markets. If the coupons do not reach their original destiny and the latter is truely "hard-wired" into bond contracts (as has been suggested to us) this option would likely qualify as a default. Of course, technically a formal default triggering CDS would have to be defined by market participants responsible for that process. Argentina's situation, if it chooses to stay current on restructured bonds but paying into a different trust, would at a minimum raise controversial opinions in this process. Moreover, for a CDS trade to look attractive bonds must trade at distressed prices that make them cheap to deliver and it is not clear they will if Argentina actually continues to pay the corresponding cashflows on the bonds.

Final thoughts: Any safe havens?

Unfortunately, Argentina's poor communication with markets does not provide assurance that the sovereign will (or even can) signal its strategy clearly and in a pre-emptive fashion that might help to reduce market anxiety rapidly. Thus, "pari passu" litigation will remain an overhang for the bond market.
All bonds—irrespective of currency—that are under local law and paid through mechanisms not within the jurisdiction of the NY court are spared from the "pari passu" litigation consequences. In the near term, the local law USD bonds like Bodens and Bonars have suffered  though less than foreign law bonds due to shorter duration and due to investor understanding that they can continue to be paid by Argentina without third party interference.

Argentina: Cutting overweight back to marketweight in our EMBIG Model Portfolio

We moved overweight Argentina in our EMBIG Model Portfolio on 17th September as a supportive environment post the Fed’s announcement of QE3 provided support for high spread Emerging Maket sovereign performance and we saw a cyclical lift to the domestic economy  in 2013, with ‘no news’ for a period in Argentina being good news for bond prices. Today’s 'news' from the pari passu court ruling is a negative risk we highlighted at the time and we see a period of uncertainty ahead. We entered the overweight when Argentina (global) 8.75% $ 2017s were at a price of 100.00, which was a spread to treasuries of 801bp versus the EMBIG spread then at 282bp. We take losses on this overweight and move back to marketweight given the downside risks, with current prices of Argentina (global) 8.75% $ 2017s down at 91.00/95.00 (spread to USTs of 1,053bp / 935bp as at 1.30pm US time 26th Oct).

We rebalance other positions in our EMBIG Model Portfolio to keep the overall portfolio position unchanged. Many questions remain about the next steps in this process, which is unusual in that there is potential risk to bond holder payments that is not being driven by the unwillingness or inability of the issuing government (Argentina) directly. The reaction of the government to this ruling and the next legal stages are not yet known and may turn out to delay or avoid any impacts on bond payments. This keeps from wanting to move underweight at this stage, until we have more clarity on these next steps and given the price drop already. However, we think that any bounces in bond prices will likely be sold into as investors are left with a great deal of uncertainty on the future payment process and where CDS are likely to be a price point that widens as technical triggers are focused on.

Vladimir Werning (AC)
(1-212) 834-4144
J.P. Morgan Securities LLC

Jonny Goulden
(44-20) 7134-4470
J.P. Morgan Securities plc

Urteil des Court of Appeals vs Argentina auf Grundlage der Pari Passu Covenants (Zusicherungen) in den Anleiheverträgen

Urteil des Court of Appeals vs Argentina auf Grundlage der Pari Passu Covenants (Zusicherungen) in den Anleiheverträgen

"Rolf Koch" <>
"x sparkasse darmstadt" <>, "mdaII rolfjkoch" <>, xy,
28.10.2012 09:00:34
wie dem attached urteil vom 26.10.2012 zu entnehmen ist, ist argentinien in new york vom berufungsgericht verurtelt worden die alten, defaulten und die neuen, umgeschuldeten bonds pari passu pro rata zu bedienen.

es besteht die gefahr, dass es argy zum 15.12. (gdp-kicker) und 31.12. normale bonds nicht möglich ist über die ausserhalb argentiniens liegende vewahrketten zu zahlen.

gegebenenfalls wird argy ein ArgyClear aufsetzen.

aus diesem grund ist die kenntnis der lagerstellen zwingend notwendig um entsprechend disponieren zu können.

ich fordere die spk da auf umgehend diese lagerstellen für die argy-bonds zu benenen !!!

sollte uns schaden aus nichtzahlungen entstehen, werden wir die spk in die pflicht nehmen.

Frau RA xy, machen Sie sich bitte Gedanken über möglichkeiten eines Eilverfahrens / Rechtschutzmassnahmen.

Die BAFIN bitte ich zu unserem Anlegerschutz auf die SPK DA einzuwirken.


rolf koch

Samstag, 27. Oktober 2012

die immunisierung von Euroclear 2004 in Folge des 56 Mio USD Coups Elliotts vs Peru

Art. 12 - Artikel 9 desselben Gesetzes, abgeändert durch das Gesetz vom 19. November 2004, wird wie folgt
«Art. 9 - Ein Verrechnungskonto beim Systembetreiber oder bei der Verrechnungsstelle, das für das Halten von
Geldern genutzt wird, und ein Geldtransfer über ein Kreditinstitut nach belgischem oder ausländischem Recht, der
einem solchen Verrechnungskonto gutzuschreiben ist, darf von einem Teilnehmer, einer Vertragspartei oder einem
Dritten, der nicht der Systembetreiber oder die Verrechnungsstelle ist, nicht gepfändet, unter Sequestration gestellt oder
auf irgendeine Weise blockiert werden.»

S 30469

Mittwoch, 10. Oktober 2012

NEW YORK, 10. Oktober (Bloomberg). Die State Street Corp. und Bank of New York Mellon Corp., zwei der weltgrößten Depotbanken,

Franken und Kronen
kosten Geld
NEW YORK, 10. Oktober (Bloomberg).
Die State Street Corp. und Bank
of New York Mellon Corp
., zwei der
weltgrößten Depotbanken,
ihre Kunden künftig dafür zur Kasse
bitten, wenn diese Franken oder Dänische
Kronen parken wollen. Schon ab
dem 1. November will State Street einen
negativen Jahreszins von 0,75 Prozent
auf Kronen-Einlagen berechnen,
geht aus einer Meldung an Kunden hervor.
Auch beim Franken solle es eine
Extra-Gebühr von 0,25 Prozent jährlich
geben. BNY Mellon hat bereits im
vergangenen Monat damit begonnen,
für Kronen-Einlagen gesonderte Gebühren
zu verlangen. Eine Gebühr für
Franken gebe es hier aber noch nicht,
wie es hieß.

FAZ Print Do 11.10.2012

Sonntag, 7. Oktober 2012

Clearstream wird für die Bösgläubigkeit seiner Organe haften und somit auch die Depotbanken.

Sonntag, 7. Oktober 2012

Clearstream wird für die Bösgläubigkeit seiner Organe haften und somit auch die Depotbanken.

Anonym hat einen neuen Kommentar zu Ihrem Post "erfüllt damit den Tatbestand einer unerlaubten Han..." hinterlassen:

Art. 6 EGBGB
Artikel 6
Öffentliche Ordnung (ordre public).

"Eine Rechtsnorm eines anderen Staates ist nicht anzuwenden, wenn ihre Anwendung zu einem Ergebnis führt, das mit wesentlichen Grundsätzen des deutschen Rechts offensichtlich unvereinbar ist. Sie ist insbesondere nicht anzuwenden, wenn die Anwendung mit den Grundrechten unvereinbar ist."

Mit Ausnahme der rechtswidrig durchgeführten Staatspleite Argentiniens - bei der übrigens alle Klagen von Kleinanlegern erfolgreich waren - gab es in der jüngeren Geschichte ausschließlich rechtmäßige Umschuldungen aufgrund gültiger, in den Anleihebedingungen vorhandenen, CACs. ( Ukraine, Moldawien, Uruguay, Belize )
Nachträglich kann auch ein Souverän nicht Anleihebedingungen ändern, er kann jedoch per Dekret ( Gesetz ) versuchen sich selbst zu entschulden, aber nur auf seinem Staatsgebiet, falls sein eigenes Verfassungsgericht nicht interveniert.
( wird aber auch nicht funktionieren, da sich GR nie für zahlungsunfähig erklart hat, was aber Vorraussetzung für eine Staatsinsolvenz mit anschließender Umschuldung gewesen wäre . )

Infolge Art. 6 EGBGB und diverser anderer europäischer und deutscher Grundrechte sowie bestehender BITs ist das griechische Gesetz 4050/2012 ( CACs ) für uns nicht gültig da rechtswidrig.

Und jetzt zu den Banken:
1. Sie wussten, dass eine ordentliche legale Umschuldung nur mit gültigen VORHANDENEN CACs durchgeführt werden konnte.
oder durch
2. einen rechtmäßigen legislativen Akt der auch für Ausländer bindend ist.
Davon kann bei Enteignung keine Rede mehr sein. Möglich gewesen wäre in diesem Zusammenhang z.b. nur eine überschaubare zeitliche Verlängerung der Laufzeit ( 3-5 Jahre ), evtl. auch eine Reduzierung des Zinssatzes; niemals aber ein Verfall der Forderung als solcher oder eine Laufzeitverlängerung um ca. 20 Jahre.

Clearstream wird für die Bösgläubigkeit seiner Organe haften und somit auch die Depotbanken.

Dass nach Verbrauchergrundsätzen hier in der BRD geklagt werden kann, wurde von mir - vor 3 Monaten - hier hervorgehoben.

CBL wird in der BRD verklagt werden.

Wer es genauer wissen will, einfach nachlesen:
Szodruch: Staateninsolvenz und private Gläubiger
BWV Berliner Wissenschaftsverlag

Von Anonym am 7. Oktober 2012 17:55 unter rolf`s griechenland blog eingestellt.

erfüllt damit den Tatbestand einer unerlaubten Handlung. na, wenn das nicht Mithaftungen der Depotbanken auslöst !!!

erfüllt damit den Tatbestand einer unerlaubten Handlung. na, wenn das nicht Mithaftungen der Depotbanken auslöst !!!

Dr. Dirk Unrau, Landesgeschäftsführer Hamburg / Schleswig-Holstein der DSW (Deutsche Schutzvereinigung für Wertpapierbesitz)

Nach unserer Beurteilung verstößt die Vorgehensweise des griechischen Staates gegen Völkerrecht, Europarecht, bilaterales Recht sowie nationales Verfassungsrecht und damit auch gegen den ordre public im Sinne des Paragraphen 6 EGBGB. Die Weigerung Griechenlands, die Staatsanleihen vollständig zurückzuzahlen, stellt zudem eine vorsätzliche sittenwidrige Schädigung des jeweiligen Anlegers im Sinne des Paragraphen 826 BGB dar und erfüllt damit den Tatbestand einer unerlaubten Handlung.

 na, wenn das nicht Mithaftungen der Depotbanken auslöst !!!

§ 826
Sittenwidrige vorsätzliche Schädigung
Wer in einer gegen die guten Sitten verstoßenden Weise einem anderen vorsätzlich Schaden zufügt, ist dem anderen zum Ersatz des Schadens verpflichtet.