Caveat:
I claim no expertise on restructuring, so the reason that no one seems to be
talking about the following may be that I am just dead wrong. Well. IMHO…
1.
You have to hand it to those hedge-fund holdouts, they’re going to make a
killing in any
of the first six scenarios here and, eventually, most likely in the seventh
as well. Which means…
2.
Restructuring sovereign debt has become much, much harder. You cannot foreclose
on sovereigns; that used to limit the leverage that small creditors could bring
to bear on the other creditors in the hopes that they would be bought out by
the big boys to complete the deal. Now, holdouts will have power over the rest
of the creditors for the duration of the deal. Of course in future bailouts, creditors
could drop the “Rights Upon Future Offers (RUFO)” clause. But that incentivizes
every small creditor and hedge fund to hovering in waiting for windfall profits
after the restructuring deal, making it that much harder to convince a
sufficient portion of the creditors to take haircuts to make a worthwhile deal.
3.
The Argentinian finance minister may not have an exit plan, but he sure rocks
sideburns. Straight out of the fifties.
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