Government of Grenada:2005-15.9.25 Reg S Step Up (UNSUBORDINATED)

Grenada 25 SU Reg S (DUS) - 15.09.2025  Price: 48 USD Chg. (in%): ±0 USD (±0.00%) Volume: - Bonds:Government of Grenada:2005-15.9.25 Reg S Step Up (UNSUBORDINATED) Symbol:   Type: Floating Rate Note Industry: Länder/Zentralregierungen Valor: 2282281 Domicile: Grenada Exchange: Boerse Dusseldorf AG

Klage Im-Ex-Bank-China v Grenada
http://ftalphaville.ft.com/files/2013/03/13cv014501.pdf

Pari passu, the cross-sovereign contamination

Joseph Cotterill

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Mar 06 18:16 | 4 comments | Share

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Part of the PARI PASSU SAGA SERIES

Some excerpts from a lawsuit filed by the Export-Import Bank of China (Taipei) against Grenada in a United States district court on March 4, 2013…

If you have been following the pari passu saga on ratable payment of sovereign debt — they tell their own story. (Click to enlarge all images.)

1.) Ex-Im Bank already has a judgement on $32m of debt defaulted on by Grenada.

2.) The loan debt had a pari passu clause, and negative pledge language.

3.) Let’s just spell that last bit out, as cited by Ex-Im Bank.

According to their plain language, the pari passu clauses preclude Grenada from making a ratable payment to a holder of External Indebtedness without making a ratable payment at the same time to Ex-Im Bank.

4.) Ex-Im Bank stayed out of Grenada’s 2005 debt restructuring.

5.) It has been watching Grenada pay the people who did restructure.

6.) Bank of New York handled some of that dough. Bank of New York lives in New York.

7.) Ex-Im Bank is now coming after these payments to Grenada’s restructured bondholders. (Hello, intercreditor consequences of ratable payment.)

8.) And Ex-Im Bank’s citing equity.

They didn’t even wait for a final Second Circuit ruling on Argentina making ratable payments to its holdouts. (Why should they, actually? The implications of ratable payment are arguably clear.)

Incidentally observe point 1) there, that Ex-Im Bank is exploring this avenue having already won judgement against Grenada. (The story of their dispute is a long one.)

The $1.3bn of claims involved in NML’s pari passu litigation against Argentina were not judgement debts. Nevertheless. EM Ltd, which holds a prior judgement against Argentina, said (in a pro-holdout amicus brief) that while “the District Court has not yet been asked to address whether the Equal Treatment Provision can be used to enforce an existing judgment,” EM Ltd “believes that the Equal Treatment Provision applies with identical force in the post-judgment context”.

And now we have crossed into new territory.

PARI PASSU SAGA SERIES

The "trial of the century" in sovereign debt restructuring, in our humble opinion. The story of Argentina, its holdout creditors, the grande finale (or is it?) of their battle in US courts.

1. A pari passu upset?
2. Around the world in Argentine bond payments?
3. Argentina, padlocks and vultures
4. Argentina, holdouts, and finding a formula
5. Friends...don't let friends leave the Republic of Argentina to litigate the sovereign debt trial of the century
6. L'état, c'est plagued by holdouts
7. Poker with Judge Griesa, part one
8. Poker with Judge Griesa, part two
9. Booking bondholder flights to Buenos Aires?
10. Stop, in the name of restructured Argentine bondholders [updated]
11. Stayin' alive, Argentina edition
12. Argentine jujutsu (and enter... Bank of New York)
13. You, in the holdout suit! Stay as you are
14. All of this has happened before and will happen again, sovereign pari passu edition
15. If you're going to CAC, now might be a good time -- Greece edition
16. Tom, Dick and Harry in Rome
17. Fairytale of New York -- in pari passu, anyway
18. Present at the creation, pari passu edition
19. Here's holding out on you, kid
20. Argentina, and penultimate pari passu case games
21. Choose your own adventure, sovereign debt trial of the century edition
22. A sovereign risk factor is born
23. I can't Belize it's not ratable payment [updated]
24. Give us a formula, Argentina
25. "Repent, Argentina!" said the ticktock judges (part one)
26. "Repent, Argentina!" said the ticktock judges (part two)
27. Raising the RUFO in Argentine bonds
28. Pari passu, the cross-sovereign contamination

This entry was posted by Joseph Cotterill on Wednesday March 6th, 2013 18:16. Tagged withArgentina, Debt Restructuring, Grenada, Pari Passu Saga, Sovereign Debt.

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1. Reportplasmaj | March 6 6:46pm | Permalink

   Except when they got their judgment they gave up their rights with respect to the bonds, including pari passu. Citi had a good piece explaining that.
2. ReportJorge Marquez | March 6 7:31pm | Permalink

   Can you link that plasmaj? Or, at least, elaborate on what you just said. I'm intrigued...
3. Reportanoldbanker | March 7 2:36pm | Permalink

   Argentina's equal treatment clause applies to payments; Grenada's only applies to ranking of the different debts. This is a critical distinction thoroughly discussed in academic analyses of pari passu.
4. ReportJoseph Cotterill, FT | March 7 5:20pm | Permalink

   anoldbanker & plasmaj - Yep. Sure, it's not a particularly cast-iron case in itself (I think) because of the judgement issue and the lack of payments language. But it is striking and a sign of an important change that they thought they can even try.