Clauses & Controversies

Ukraine's Expansive "Fiscal Laws" Clause International sovereign bonds, and particularly those issued under English law, often include a clause providing that payments are subject to the applicable "fiscal and other laws." Usually, the clause makes clear this refers to fiscal laws in the “place of payment” (e.g., Luxembourg). Separately, international bonds also provide that, if the issuer imposes any taxes on bond payments, it must "gross up" payments to foreign investors, so the tax does not reduce their payments. Together, the two clauses usually immunize foreign investors from taxes imposed by the issuer but leave room for taxes imposed by the place of payment. Ukraine's bonds are different. They seem to leave room for Ukraine to impose its own "fiscal" law on payments. Arguably, they leave investors subject even to local laws that aren't fiscal in nature. Might this be a source of leverage for the country in its negotiations with GDP warrant holders, who have so far refused to make concessions in restructuring talks? Producer: Leanna Doty

The Greek GDP Warrant Drama Greece's debt situation has improved remarkably, from default status in 2012 to investment grade in 2025. A few weeks ago though, Bloomberg reported on a brewing drama with the GDP warrants that were offered to investors in the brutal 2012 restructuring. Apparently, Greece has elected to exercise its right to call the warrants, and holders are yelling bloody murder at the low price at which Greece says it is entitled to buy. Every side has lawyered up and claims the other side is acting unreasonably. We speculate wildly on what might actually be going on and what is likely to happen. Producer: Leanna Doty

Some Questions, Now That it's About 3 Years Since Russia's Default It has now been around 3 years since Russia's invasion of Ukraine, which prompted EU and US sanctions and a default on Russia's external bonds. The prescription clause in these bonds says that Russia's obligations become void unless investors make claims within three years of the date payment is due. What does it mean to “make” a “claim”? Filing a lawsuit would do the trick. What about an email requesting payment? An automated message, which the depository sends out every payment date? Should bondholders have sought an agreement tolling the prescription period? Since they didn't, does Russia now have what amounts to an option to pay past due amounts? And what about interest on unpaid amounts? Does Russia owe interest on payments that were impossible to make due to sanctions? Producer: Leanna Doty

Sovereign Debt Odd & Ends An odds and ends podcast about unrelated sovereign debt topics. First up, Venezuela. Most investors have been sitting around waiting for an eventual restructuring and lifting of US sanctions. But a handful of funds sued early, got judgments, and have spent years trying unsuccessfully to collect. If they had succeeded, they would have recovered much more than similarly-situated creditors who waited around for a restructuring deal. But they failed and, in a bizarre twist, have asked the court to vacate their judgments, effectively returning them to the creditor queue. We cry foul. Next up, another fiscally-irresponsible and increasingly author ... well, it's the United States. We discuss the crazy (and terrifying) idea that the US might unilaterally extend the maturities of government debt. Producer: Leanna Doty

Is There Any Law of State Succession? Syria, Ukraine and Greenland. The law of state succession to obligations comes mostly from a different era, when war and conquest were legal and borders changed with some frequency. Today, we are faced with multiple situations where borders might change due to war. Does the law tell us what happens to the debts attributable to the acquired territory? And how do we translate legal rules that evolved in the 18th and 19th centuries into the modern era? Paul Stephan (Virginia), one of the foremost international law experts, joins us to discuss. Producer: Leanna Doty

What if Trump Discovers that Unpaid UK (and French) Debt From WWI? The current administration has tossed concepts such as “special relationships” with allies out the window. The administration seems willing to apply just about any leverage it has to obtain concessions from allies, including concessions that might reduce the US debt. Seen in that light, what will happen when Trump and the Musketeers discover that the UK and France have hundred-year old unpaid debts? With interest, that unpaid debt would now amount to a few trillion dollars. Enforcing these debts would be near impossible, except that the UK and France own a whole bunch of US Treasuries. Could the administration try to force a swap of those Treasuries into longer term obligations? Or try to use the US government's claims against the UK and France as a setoff, reducing payments on US debt held by those governments? Seems loony. But loony is normal these days. Producer: Leanna Doty

What Might a Syrian Debt Restructuring (Eventually) Look Like? There is little doubt that Syria needs to restructure its debt, among other reasons to pave the way for rebuilding after a long and brutal civil war. It strikes us as too early to envision what that process will look like, but we can identify some of the key issues. The country owes a lot to official creditors, especially Iran and Russia. Much of this was off-books and was used for the military or otherwise to support former President Bashar al-Assad's repressive regime. Not surprisingly, we are already hearing the term "odious debt" raised to suggest these debts need not be repaid; there may be a separate doctrine allowing repudiation of certain war-related debts. We talk about whether these (arguable) doctrines of international law have any relevance here and about the potential role of the U.S. in a debt restructuring. Producer: Leanna Doty

User Fees on the US Treasury Strategic Gold Crypto Reserve Trump plans to reduce the US debt. We are missing some of the steps, but here are the ones we have identified so far: 1. Golden passports 2. Tariffs 3. Maybe not tariffs 4. Okay, tariffs 5. Something about gold 6. User fee on treasuries 7. Crypto 8. ??? We speculate about what we are missing. Maybe it's a red Tesla? Producer: Leanna Doty

Why Do We Care Who is Behind HRB's Sri Lankan Lawsuit? The Hamilton Bank litigation against Sri Lanka appears to be reaching the end. Or is it? The stays that were granted during restructuring talks have implications for future sovereign debt restructurings, we think. Especially Venezuela's restructuring, which is going to be a huge undertaking. And then, there may be more drama to come in the HRB lawsuit itself. Sri Lanka says it needs more discovery, apparently to dig into whoever might be behind the lawsuit. Why? Producer: Leanna Doty

Greece's (Ratings) Rise From the Ashes – Wow, but also How? We study sovereign restructurings, which means we primarily study countries going into and struggling to get out of crisis. Serial defaulters such as Argentina and Ecuador are frequent topics on our podcasts. And given how bad things were a decade ago, and its history of frequent defaults before that, we might have expected that Greece would join Argentina and Ecuador as among our more frequent podcast topics. And, indeed, Greece is back. But not because it is back in crisis. Instead, it is because it has had a remarkable rise from the ashes to almost investment grade. To discuss this rise, our two good friends from Moodys Ratings, Sarah Carlson and Elena Duggar, join us. Check out an overview of Moodys Sovereign Methodology here: https://ratings.moodys.io/sovereign-methodology Producer: Leanna Doty

Getting "J. Screwed" Sounds Better than Getting "Argentina'd" In the world of corporate debt, everyone seems to be talking about "Liability Management Exercises," where a borrower, with a subset of creditors, exploits loose loan covenants in ways that leave other creditors screaming mad. Even better, these LME techniques have clever names: "trap doors," getting "J. Screwed," etc. And while the worlds of sovereign and corporate debt don't overlap all that much, we wonder if litigation over LMEs can tell us anything about sovereign debt restructurings. Alas, we don't know much about corporate debt. Thankfully, Andrew Kissner (Morrison Foerster) joins us to dispel our confusion. Producer: Leanna Doty

Is Sri Lanka's Loss Reinstatement Provision a Penalty? Two of our favorite things to talk about are innovative contract clauses and ancient illogical contract doctrines that unexpectedly bite in the ass. A few weeks ago, we walked through the Loss Reinstatement provisions for Ghana and Zambia. We asked the question of whether those provisions might run afoul of the antiquated and bizarre (to us) anti-penalty doctrines under English and New York law. English law having recently become more permissive with regards to permitting penalty type clauses – if they have a legitimate business purpose -- we speculated about whether the Zambia/Ghana clauses might pass muster. Maybe. But Sri Lanka's version of the clauses is under New York law. And New York law on this matter is still stuck in the dark ages, best we can tell. So, does the Loss Reinstatement provision for Sri Lanka run afoul of the penalty doctrine? Producer: Leanna Doty

Sri Lanka's New MFC Clause — Have "Contorts" Arrived in Sovereign Debt? The doctrine of tortious interference with contracts is one of several that sits at the intersection of tort and contract law. These "contorts" confuse law students — lawyers and law professors too! — but can be important in practice. If not anticipated, they can create problems for unsuspecting parties and lawyers. Has Sri Lanka's novel Most Favored Creditor clause created problems for creditors who participated in the country's restructuring? The MFC clause is confusing in places. It simultaneously seems to contemplate Sri Lanka striking a deal with holdouts (after litigation ends) and to quite aggressively try to prevent such a deal from happening. We discuss whether this creates risks for restructuring creditors and wonder why such an aggressive clause was viewed as necessary. Producer: Leanna Doty "Shades of Spring" Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attribution 4.0 License creativecommons.org/licenses/by/4.0/

YPF and Argentina's Contributions to International Law Argentina owes over $16 billion in connection with its nationalization of state oil company YPF. A federal judge in the Southern District of New York is considering whether to order Argentina to hand over its shares in YPF — technically located outside the United States — to pay part of the judgment. Can it do that? Paul Stephan (Virginia) joins to talk about how foreign state property located outside the United States is (and is not) protected by the law of foreign sovereign immunity, residual common law protections, and doctrines like comity. Producer: Leanna Doty "Shades of Spring" Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attribution 4.0 License http://creativecommons.org/licenses/by/4.0/

The Penalty Doctrine in Contract Law We've never been fans of the contract law rule against penalties. Why can't parties (sophisticated ones at least) agree to suffer a penalty in the event of breach? We'd ordinarily avoid this topic, because the doctrine makes little sense and the issue doesn't come up much in the sovereign debt world. But recently, a couple of sovereign restructurings (Ghana and Zambia) have used “Loss Reinstatement Provisions.” At least on their face, these provisions seem vulnerable to challenge under the penalty doctrine, since, if the sovereign defaults on the restructured deal, they impose a loss that seems untethered to the injury creditors have suffered. Would these new clauses be enforced if challenged? The contracts in question are both under English law, which we don't know much about. But that does not stop us from speculating and arguing. Producer: Leanna Doty

A New Competition For Law (and Jurisdiction)? Jurisdictions famously compete for businesses to use their corporate law. Less discussed is the competition for having one's law chosen to govern contracts. But it happens. Sovereign debt lawyers in England and New York can, if they have a few drinks in them, can be quite entertaining in their sniping at each other about whether English or New York law is better for sovereign issuers. And the sovereigns for their part, seem to only care about what they have done in the past, regardless of what the lawyers say or what court decisions come down (remember pari passu and Judge Griesa in New York – nothing changed). But recently, as a result of the attempts of a few members of the New York legislature to try and mess with sovereign restructuring framework (“improve”, some would say – but not us), a couple of issuers have put in place provisions that allow them to choose to switch governing law (but not jurisdiction?) mid stream, in the event that New York actually passes some daft legislation. We think this is all great fun to talk about. Angry emails about how we should take these matters more seriously should all be sent to the address of Hamilton Bank in Nevis. Producer: Leanna Doty

An Execution Sale is Not a Receivership. (Right?) Creditors of Venezuela and PDVSA, its state oil company, have forced an execution sale of PDVSA's only US asset – which happens to be the ultimate parent company of CITGO. The federal judge overseeing the process has tried to keep things orderly, but the inter-creditor fighting is getting juicy. Some lower priority creditors have filed new lawsuits in an apparent attempt to jump the queue. Now the special master overseeing the execution sale process wants the court to enjoin these lawsuits. Which strikes as us a reach – almost as if the execution sale process is some kind of receivership. So we asked Nate Oman, who has written about the potential use of receiverships to solve sovereign debt problems, to help us figure out what is going on. Producer: Leanna Doty

Hamilton Bank v. Sri Lanka: What the $@#$ ? Accusations that Hamilton Bank is a giant fraudster stealing depositor funds, bizarro requests from Hamilton to the court that other creditors be constrained in using their contract rights against it, an amicus intervention in the case to say nothing at all . . . and on and on. This case gets more and more bizarre, which makes us suspect that whatever is going on under the surface is even weirder than the (already weird) stuff that is visible to outsiders like us. What no one is discussing, though, is the “unconditional rights” provision in the trust indenture document that arguably gives minority bondholders protection against any attempt to do a cram down. Producer: Leanna Doty

Zambia's Restructuring: A Post-Mortem Zambia's recently concluded restructuring seemed to drag on forever, debilitated by conflicts among the various creditor groups. Why did these different groups think the others were being unreasonable in their demands? And what can we learn from what happened? Our guest is one of the keenest observers in the sovereign debt world, who followed this restructuring at the ground level, Theo Maret. Producer: Leanna Doty

The Champerty Show Ah, Champerty. Perpetual runner-up, to the doctrine of consideration, in the Stupidest Legal Rule pageant. Why do directly (e.g., via the abuse of process claim) what you can do clumsily and indirectly (by limiting an injured party's access to finance)? But what do we know? Actually, not much. We do know that Venezuela/PDVSA won a very interesting Champerty case in the Southern District of New York. And while we know very little about Champerty, we know enough to know we don't like the doctrine very much, even if the outcome seems defensible. Producer: Leanna Doty

IMF Rescues Pakistan From the Brink of Default (Again) Pakistan looks to be in the process of finalizing yet another IMF program. Yet again, it has been rescued from the brink of default with a bailout justified by some heroic assumptions about how a state of sustainability will magically materialize. Why? Our guest, Zohra Ahmed, of Boston University Law School, has a theory: that these bailouts (that ultimately hurt Pakistan because true economic reform never happens) are the price of consent. Specifically, consent by Pakistan to cooperate with US military interests. We discuss with Zohra both her theory and the evidence for it. Producer: Leanna Doty

A Better Way to Freeze (and Seize?) Russian Assets? Ever since Russia invaded Ukraine in 2022, there has been talk of what international law doctrines might be utilized to induce Russia to back off. One of those doctrines that has been whispered about is now, thanks to a wonderful new article by our guest, international law guru and Yale Law professor, Oona Hathaway, is that of Countermeasures. Oona and her co authors not only explain the law of countermeasures, but argue that these legal principles naturally extend into a doctrine of “collective countermeasures”. We ask Oona about these doctrines and their scope, particularly in the context of Russia and Ukraine. She argues that the doctrine, properly understood and applied, is (and should be) narrow. To quote Spider Man (maybe), “With Great Power Comes Great Responsibility”. Producer: Leanna Doty

Cambodia's Debts to the US: How “Dirty” Are They? Roughly a half century ago, in the 1970s, the US infamously bombed Cambodia. Less known is that the US, through a “Food for Peace” program, made a series of loans to the somewhat dodgy government of General Lon Nol. The loans were made, at least in part, to assist Cambodians displaced by the bombings. Fast forward a few decades, the US government periodically asks for the debts to be paid back, with interest. Cambodia responds: Seriously, you want to get repaid for lending money to an awful government (that you helped prop up after a coup) to pay for bombs that you dropped in violation of all sorts of laws? The real story is a bit more complex than the soundbite version. Our guest, Professor Randle DeFalco of Widener University Law School helps us begin to unpack the story of these debts. Producer: Leanna Doty

Ukraine's Preliminary Debt Restructuring Deal Ukraine reportedly has reached terms with a subset of its bondholders, agreeing to restructure the country's roughly $24 billion in bond debt. What to make of the deal? It seems (to our view) to be premised on the IMF's entirely unrealistic assumptions about Ukraine's future debt repayment capacity. The reports we have seen about deal terms also don't explain what will happen to some important parts of the debt stock – including that of state-owned energy company Ukrenergo. Joseph Cotterill of the Financial Times joins us to explain the basic parameters of the deal, the underlying assumptions, and whether another restructuring of private debt is in the cards. And while we have Joseph, we also ask some questions about recent developments in litigation arising out of Mozambique's "tuna bonds" debacle. Producer: Leanna Doty

Tortious Interference and Inter-Creditor Duties Creditors in sovereign debt restructurings often complain about other creditors. And creditors often try to limit what other creditors get (at least indirectly, via most favored nations clauses, comparability of treatment, etc.). Can these efforts sometimes create a risk of liability? Does that risk even extend to official creditors? In the recent Zambian restructuring negotiations, rumor has it that the doctrine of tortious interference with contract was invoked when commercial creditors felt that official creditors were expecting them to make unrealistic sacrifices. Andrew Wilkinson (Weil, which advised the Zambia External Bondholder Steering Committee) joins us to talk about the restructuring of Zambia's debt and the question of inter-creditor duties. Producer: Leanna Doty

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

The Last Sovereign Bond in New York Due to litigation over the PDVSA 2020 bond, all future issues of sovereign bonds in New York have been canceled, effective immediately. (PDVSA is quasi-sovereign, but whatever...) You may have heard that New York's highest court has ruled that investors cannot enforce sovereign bonds, period. Well, maybe that's not quite what it held – okay, not even remotely – but it is how some in the market are reacting. In fact, the New York Court of Appeals did nothing unusual. It held that Venezuelan law decides whether the collateral pledge backing the PDVSA 2020 bonds is valid but that, even if invalid, New York law will decide whether and how this affects investors. Some are complaining that this ignores the contractual choice of law provision designating New York's law as governing. But if investors are surprised, they shouldn't be, and there is nothing unique or strange about New York's conflicts law. Anyway, no one has said the bond is unsecured. No need for all the bedwetting. Producer: Leanna Doty

Something Black in the Lentils at Ukrenegro A few weeks ago, there was an announcement that some of the creditors of the Ukrainian electric company, Ukrenegro, wanted their debt restructuring talks to be separate from any broader Ukrainian debt restructuring. And the prices of the Ukrenegro bonds (backed by a sovereign guarantee) shot up. This intrigued us. Why did the market suddenly see new value in these bonds, simply because of an announcement? Our old friend, Chris Spink, one of the best sovereign debt reporters in the business, talks with us about what might be going on. We can't help but speculate… Producer: Leanna Doty

Back to the Future (Again) -- Russian Frozen Assets Episode In recent months, there has been much talk about what to do with frozen Russian assets and, in particular, whether they can be repurposed to aid Ukraine in its fight against the Russian invasion. This is not the first time that large amounts of Russian assets have been frozen though, with heated debates about whether to expropriate the frozen funds. In this podcast we talk to Professor Lauge Poulsen of UCL about one of these prior freezings, from the early 1900s. Indeed, the 1918 default of Soviet Russia on investors in Tsarist Russian bonds is still one of the largest ever sovereign defaults and it (along with other expropriations) then resulted in widespread freezing of Russian assets overseas. Lauge and his co author, Eileen Denza, have a fascinating article about the negotiations between the UK Foreign Office and the Soviets over these frozen assets and the ultimate resolution of all of the various claims and counterclaims (a process that took close to three quarters of a century). The article, “Settling Russia's Imperial and Baltic Debts” appears in the American Journal of International Law. Producer: Leanna Doty

Tierra del Fuego and Tinfoil Hats The financial press has mostly overlooked the recent debt restructuring by Argentine province Tierra del Fuego. (To be fair, Mark has overlooked it too.) But there were aspects of the deal that might strike some as a bit coercive – like an initial proposal to pay investors who consented early more than investors who took more time, and different payments ultimately made to consenting and non-consenting creditors. Why bother using such coercive tactics, when they arguably weren't needed to get the deal done? Were the tactics even coercive? Should conspiracy theorists see a broader pattern in which issuers are using coercive tactics in minor restructurings so as to create a precedent for their use in big ones? We put on our tinfoil hats and speculate. Producer: Leanna Doty

Can Someone Explain What is Happening to SLBs? A year and a half or so ago, we were working on a paper with UVA's Quinn Curtis on how the promises being made in the typical “use of proceeds” Green Bonds were empty. In the course of that project, we had loads of conversations with industry insiders, who largely agreed, but said that we were studying a thing of the past. The product of the future was the sustainability linked bond (slb). Unlike boring “use of proceeds” bonds, these had real incentives and were going to replace the 1st generation simplistic products. Now, at the end of 2023, we are hearing that this product is in disfavor in the markets. Why? What's going on? Not sure we have answers – but we sure have questions and speculations. Producer: Leanna Doty

Equity Receiverships and Sovereign Debt Observers of sovereign debt markets have long lamented the inability to impose restructuring terms on dissenting creditors. Indeed, there are currently several bills pending – some of which are utterly bonkers, in our view – in New York to change the law in ways that will limit holdout activity in sovereign debt cases. But what if the tools to comprehensively restructure sovereign debt are already there in New York law? Our guest, Nate Oman (William and Mary) has a new paper, Restructuring Ruritania (link below), examining the potential use of the equity receivership in this context. The equity receivership has a long history (e.g., railroad reorganizations) and has been discussed as a potential solution to state debt crises and other areas. We talk to Nate about what an equity receivership would look like in the sovereign debt context and the advantages (and limitations) it offers. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4656147 Producer: Leanna Doty

How Much of the YPF Judgement Will Burford, Realistically, Recover? Burford Capital, a highly sophisticated litigation finance operation, has won an enormous judgment ($16 billion, where its share is upwards of $6 billion) against the Republic of Argentina. The question is how much of this judgment Burford is realistically likely to be able to collect on. Using a recent FT Alphaville article, “Dog Catches Argentine Car” by Jay Newman as our foil, we try to break down the likelihood of Burford getting a recovery. We think a significant recovery is plausible – particularly if the new administration in Argentina decides to default and renegotiate all of the myriad claims against it once and for all. Producer: Leanna Doty

Argentina's 2001 Debt Saga Revisited Argentina's 2001 default spawned nearly 15 years of litigation, culminating in the (in)famous pari passu injunction. Many episodes of the saga have been told in isolation, but it is complicated—FRANs, pari passu, Lock Law, RUFO, etc.—and, until recently, we didn't know of anything that captured it in full. Our guest, Greg Makoff, has written a forthcoming book that manages to tell the entire story clearly without sacrificing either the drama or the complexity. The book is Default: The Landmark Court Battle over Argentina's $100 Billion Debt Restructuring. We talk to Greg about mistakes made (many, many mistakes) in the course of Argentina's 2005 and 2010 debt restructurings and about whether lessons can be drawn for the country's current debt troubles. Producer: Leanna Doty

What the FRAN? This episode is on Argentina's famous FRANs (floating rate accrual notes). The notes were intended to protect holders against the risk that the country's credit would deteriorate... and boy did they ever. Due to a drafting glitch, or a simple failure of imagination, the FRANs wound up earning a few lucky (well, smart) investors somewhere around 100% annual interest. Argentina's unsuccessful effort to avoid paying also raised some entertaining questions of contract law. It's not common for sovereign states to raise the unconscionability defense. Ben Heller joins us to talk about the FRANs, with some bonus discussion of dodgy exit amendments. Producer: Leanna Doty

What to Make of the Stay Order in Hamilton Reserve Bank v. Sri Lanka? Strange things have been going on in the Hamilton Reserve Bank v. Sri Lanka case in New York federal court. Recently, in response to requests from the US and other governments, the judge agreed to stay the lawsuit for 6 months before giving HRB a judgment. We have long been confused about why HRB wants a judgment so quickly, and we're no less confused now. Does HRB have a stake big enough to block a vote to modify payment terms? We have assumed it does but are now less sure. Even if HRB can block a vote on payment terms, we're wondering if Sri Lanka can use exit consents (which HRB's position is clearly too small to veto) to twist its arm into going along with a restructuring. Otherwise, why all the fuss? Clearly the judge thinks HRB creates risks to the restructuring, and the U.S. and other governments seem to agree. We try to figure out what is going on. Producer: Leanna Doty

China's Defaulted War Debts We've long viewed China's defaulted debt from the first half of the twentieth century through the lens of the communist government refusing to pay back the defaulted debts of Imperial China. But historian Elya Zhang's wonderful work on China's debts documents how the story is much more complex and, in particular, how the Imperial debt is but a sliver of the Chinese sovereign borrowing that was subsequently defaulted on. Much of it, it turns out, was war related borrowing of various types done during the 1938-49 period. And the stories underlying what happened are, as Elya tells us, are fascinating. Producer: Leanna Doty

China's Impact on Sovereign Debt Restructurings There has been much chatter (a lot of it out of Washington) about how China is mucking up the financial architecture for sovereign debt restructurings. Given the political and strategic biases of much of the chatter, it is often hard to separate out real claims from bullshit. Political scientists, Lauren Ferry and Alexandra Zeitz, in their paper, “China, the IMF, and Sovereign Debt Crises”, have dug into the question. Using both qualitative and quantitative data, they document and describe how the debt negotiation processes for distressed countries with the IMF has materially changed in the wake of China's emergence as a major lender. In the podcast, we discuss, among other things, the general question of China's impact on the debt restructuring processes today, the measures they use in their analyses, and what is likely to happen in the foreseeable future. Producer: Leanna Doty

Dodgy SLBs We've been intrigued by the potential of sustainability-linked bonds. In theory, they should improve on green, “use of proceeds” bonds by providing incentives for issuers to invest in emissions reductions and other climate-related objectives. That's why many in the green finance world were excited about them. But how are they working out in practice? Priscilla Azevedo Rocha and Todd Gillespie of Bloomberg talk to us about their in-depth investigation of these creatures (with Akshat Rana). We talk about how SLBs work (or don't work) to help ameliorate climate change, how they conducted their investigation, how we might follow up on it, and what they think the future of the future of these products is. Producer: Leanna Doty

Are sustainability-linked bonds here to stay? Sustainability-linked bonds (SLBs) tie the issuer's payment obligations to the satisfaction of some environmental benchmark. In principle, this could be good and provide an incentive for bond issuers to set ambitious climate-related goals. In reality, SLBs have proven a bit of a bummer. They set unambitious targets, include dodgy legal terms, and provide for only a trivial increase in payments if the issuer misses its target. Recently, ESG-focused investment also has prompted political backlash by conservative politicians. Are SLBs doomed to fail, or is there hope for them to play a meaningful role in funding a green transition? Kenza Bryan of the Financial Times has written extensively about SLBs and green finance in general and joins us to talk about the state of the market for SLBs, carbon credits, and green finance in general. Producer: Leanna Doty

Sovereign Sustainability Linked Bonds: What's Going On? The newest product on the sovereign scene is the sustainability linked bond. The product is potentially exciting because, on its face, it seems to remedy some of the incentive problems embedded in the more commonly used “use of proceeds” green bonds. Chile and Uruguay have issued slbs with considerable fanfare. But these are two strong issuers with robust commitments to climate change. The question we are interested in is whether these instruments are providing issuers with incentives to do more for climate change than they would otherwise do. Our guest, Ignacio Lagos, of Cleary Gottlieb, is one of the young stars of the sovereign debt field and talks to us about these deals. And since we had Ignacio with us, we seized the opportunity to also try to understand a bit more about the intriguing Hamilton Bank v. Sri Lanka case and that Registered Holder/Beneficial Owner stuff. Producer: Leanna Doty

Venezuelan Debt: The CITGO Auction, Statute of Limitations, and Other Enforcement Matters It's a busy time for Venezuela's creditors. The auction process is starting for the sale of Venezuela's ownership interest in US-based refiner CITGO. The six year statute of limitations on bond claims is coming up, and both the Maduro government and the National Assembly are trying to head off a new wave of lawsuits by giving assurances that, if bondholders hold fire, the country won't later raise the statute of limitations as a defense. Meanwhile, although a comprehensive debt restructuring would seem to be in everyone's best interests, the ongoing US sanctions regime continues to make that impossible. Steven Bodzin of REDD Intelligence is one of the most incisive and knowledgeable observers of what's going on in Venezuela. He joins us to help figure out the current state of play. Producer: Leanna Doty

Chasing Payment on Old Cuban Debt We have a great fondness on this podcast for unpaid historical debts and the attempts to litigate these. One such story is that of Cuban debts. Our guest is Rebecca Burton of Linklaters (London), who joins us to talk about the saga of CRF v. Banco Nacional de Cuba and the 2023 ruling out of the High Court in London. Among the key questions here was whether in fact CRF, a hedge fund that had consolidated a bunch of old Cuban debts, had in fact validly received authorization to be able to litigate against the Cuban state. Producer: Leanna Doty

Unpacking the Argentine GDP Warrants Case In 2005 and 2010, Argentina issued GDP-linked warrants as a sweetener to investors participating in its debt restructurings. At the time, the warrants didn't seem so sweet. Holders assigned them little value, and most got rid of the warrants for pennies on the dollar. But in April, in a lawsuit brought by hedge funds that had bought the warrants on the cheap, an English judge ruled that Argentina had dramatically underpaid on the warrants, adding nearly 1.5 billion to the amount the country owes to foreign creditors. Our guests this episode are Tim Dodsworth, Maggie Hemsworth, and Severine Saintier, hosts of the fabulous Unpacking Contract Law podcast, who help us understand the intricacies of the case. Producer: Leanna Doty

Is a Diaspora Bond a Loan or a Gift? Contract law distinguishes contracts from promises to make a gift. Contracts are enforceable; gift promises are not. Theories supporting this distinction note that gift promises often are made in relational and non-market settings where reputational and other enforcement mechanisms work well, and where legal enforcement is less needed and might even be disruptive. Yet a literature in economic sociology shows a much blurrier boundary between gift and market transactions. One context in which this is so involves diaspora bonds issued by sovereign states. Dan Lainer-Vos (USC) joins us to talk about the contrasting experience of issuing diaspora bonds in Ireland and Israel, the subject of his terrific book, “Sinews of the Nation." Producer: Leanna Doty

Hamilton Bank Redux We have talked before about the lawsuit by Hamilton Bank against Sri Lanka, noting that Hamilton Bank is trying to avoid the effect of a restructuring. Once it gets a judgment, it will have a claim to be paid in full despite any subsequent modification of the bond. Sri Lanka seems to know this and has been raising plausible but weak legal arguments in an apparent attempt to delay the case. Now the government has outright asked the court to stay the lawsuit (though without explicitly saying what it is concerned about). We are skeptical the judge will grant an outright stay, but perhaps there is room for a little foot dragging...? Producer: Leanna Doty