Collective Action Clauses: A first global test in Argentina

Collective Action Clauses: A first global test in Argentina Remarks by Ed Bartholomew at the

Sovereign Debt Restructurings Conference February 28, 2020

Global Independence Center LeBow College of Business at Drexel University

Evolving standards for collective action clause (CACs) Original CACs (2003) Series Two-limb

Enhanced CACs (2014) Series Two-limb Single-limb

by series

aggregated

by series

aggregated

aggregated

Source

Mexico

Uruguay

ICMA

ICMA

ICMA

Bond-level

75%

66-2/3%

75%

50%

Uniformly

threshold

vote

vote

vote

vote

applicable

66-2/3%

75%

vote

vote

Aggregated threshold

N/A

85% vote

N/A

“Kirchner bonds” (2005/10 restructuring)

“Macri bonds” (2016-18) © E. Bartholomew, 2020

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Illustration

Voting – Series-by-series, Mexico-style CACs Maturity

Coupon

Amount (mm)

Vote Yes / No

% Yes

15 May 2020

6%

$200

99 / 101

49.5%

✗

--

12 Apr 2022

12%

$200

140 / 60

70.0%

✗

--

18 May 2025

7.5%

$600

451 / 149

75.2%

✓

$600

14 Mar 2030

9%

$1,000

800 / 200

80.0%

✓

$1,000

25 Jan 2040

6.5%

$1,000

900 / 100

90.0%

✓

$1,000

$3,000

2,390 / 610

79.7%

Total

© E. Bartholomew, 2020

Bond-level: 75% Aggregate: --

Amount restructured

$2,600 2

Illustration

Bond-level: 66 2/3% Aggregate: 85%

Voting – Two-limb, Uruguay-style CACs Maturity

Coupon

Amount (mm)

Vote Yes / No

% Yes

15 May 2020

6%

$200

99 / 101

49.5%

✗

--

12 Apr 2022

12%

$200

140 / 60

70.0%

✓

--

18 May 2025

7.5%

$600

451 / 149

75.2%

✓

--

14 Mar 2030

9%

$1,000

800 / 200

80.0%

✓

--

25 Jan 2040

6.5%

$1,000

900 / 100

90.0%

✓

--

$3,000

2,390 / 610

79.7%

✗

--

Total

© E. Bartholomew, 2020

Amount restructured

3

Illustration

Bond-level: 50% Aggregate: 66 2/3%

Voting – Two-limb, ICMA-standard CACs Maturity

Coupon

Amount (mm)

Vote Yes / No

% Yes

15 May 2020

6%

$200

99 / 101

49.5%

✗

--

12 Apr 2022

12%

$200

140 / 60

70.0%

✓

--

18 May 2025

7.5%

$600

451 / 149

75.2%

✓

--

14 Mar 2030

9%

$1,000

800 / 200

80.0%

✓

--

25 Jan 2040

6.5%

$1,000

900 / 100

90.0%

✓

--

$3,000

2,390 / 610

79.7%

✓

--

Total

© E. Bartholomew, 2020

Amount restructured

4

Illustration

Voting – Single-limb, ICMA-standard CACs Maturity

Coupon

Amount (mm)

Vote Yes / No

% Yes

Amount restructured

15 May 2020

6%

$200

99 / 101

49.5%

$200

12 Apr 2022

12%

$200

140 / 60

70.0%

$200

18 May 2025

7.5%

$600

451 / 149

75.2%

$600

14 Mar 2030

9%

$1,000

800 / 200

80.0%

$1,000

25 Jan 2040

6.5%

$1,000

900 / 100

90.0%

$1,000

$3,000

2,390 / 610

79.7%

Total

© E. Bartholomew, 2020

✓

Bond-level: -Aggregate: 75%

$3,000 5

Argentina foreign-law bonds

$64 billion principal outstanding, 21 series of bonds

<3 yrs ($11b) [5] Kirchner Bonds ($25 bn) [6 series]

Macri Bonds ($39 bn) [15 series]

6-9 yrs ($17b) [5] 16-28 yrs ($8b) [4] 97 yrs ($3b) [1] Source: Presenterâ&#x20AC;&#x2122;s calculations from press reports Š E. Bartholomew, 2020

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Thank you!

Questions?

Contact details LinkedIn: ed-bartholomew-bbp Email: bartholomew@gwu.edu

Š E. Bartholomew, 2020

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