UKRAINE - Selling UAH 2 million bonds

Business Ukraine places UAH2 billion hryvnia-pegged domestic bonds at 19% Journal Staff Report KIEV, Aug. 20 – Ukraine, with the participation of Deutsche Bank at a primary auction on August 15, placed 2.5-year hryvnia-pegged government domestic loan bonds worth over UAH 2 billion among nonresidents, Prime Minister Arseniy Yatseniuk told reporters. "We've placed securities worth $200 million via Deutsche Bank at 19% in hryvnias. This means that they [foreign investors] believe that stability will be seen in Ukraine and there will be no exchange rate fluctuations," the premier said at a meeting with farmers in Cherkasy region on Tuesday. http://www.ukrainianjournal.com/index.php?w=article&id=19026

Not up on this type of info.
Guess this is 2 billion worth of foreign investment that's being sold?
That would then make it a foreign debt - because investors must be paid.

Argentina - what's likely to happen following default

 LAHT Article

"Barings tried for years to reach a settlement on the debt, repeatedly sending representatives to Buenos Aires, but it was not until 1857 – 29 years after the default -- that Barings and bondholders (backed by the threat of some stiff English gunpowder diplomacy) reached a settlement with what was now the Republic of Argentina -- by issuing new bonds, of course.

And with Argentina’s credit now restored with a £1.6 million Barings recapitalization of the arrears, Barings went on to market another £550,000 for Argentina in the first portion of a £2,500,000 33 year Argentina 6% bond maturing in 1899 and even more issuance followed.

By 1890, however, Argentina was on the brink of default again and almost took Barings down with it. With the Bank of England becoming the world’s lender of last resort, it was Baring’s old rival, Rothschild, who would persuade the British government to put together what became a £17 million rescue on the principle that the collapse of Barings would be a “terrific calamity for English commerce all over the world.” [LAHT]

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COMMENT

The world of bonds/debt and investment seems to have:

* a villain (defaulting debtor)
* a victim (investor)
* a rescuer (financial group or even foreign government bank)

What seems to happen is that someone comes along (a group of big investors or a goverment) and offers a bail-out and restructured terms ... and the debt carries over in some shape or other.

If nations that are indebted aren't careful, they stand to lose territory (and maybe even sovereignty), is what I got out of it. 

So that maybe explains why people are prepared to continue to invest in a 'bad' lender.  Countries have value:  resources, territory, strategic location etc.

What's going to happen?  I'm guessing there's going to be a buy-out and restructuring on terms that probably aren't favourable to Argentina? 

But having read about the 65% 'haircut' or whatever it was, it doesn't sound like the terms are all that great for the lenders.  But it depends on how you view profits, I guess.  In other words, how much profit is enough profit?

ARGENTINA - $1 BILLION DEFAULT INSURANCE TRIGGERED ON BONDS

Argentina Default Triggers $1 Billion of Swaps After ISDA Ruling By Abigail Moses Aug 2, 2014 2:04 AM ET Argentina’s failure to pay interest on its bonds is a credit event that will trigger settlement of $1 billion of default insurance, according to the International Swaps and Derivatives Association. ISDA’s determinations committee made the ruling in response to a question posed by Swiss bank UBS AG after the government missed a July 30 payment deadline on $539 million of interest. Argentina is the first nation to trigger default swaps since Greece restructured its debt in 2012. The ruling was seen by traders as complicated because Argentina made the required payment to the trustee for the bond, Bank of New York Mellon Corp. The bank said yesterday that a U.S. judge’s ruling bars it from passing the money to bondholders without a resolution of the nation’s dispute with hedge funds led by Elliott Management Corp., which sued the nation for $1.5 billion. “From the perspective of Argentina, you could argue they provided the payments and the transfer mechanism doesn’t work,” said Jochen Felsenheimer, the Munich-based founder of XAIA Investment GmbH, which manages 2.8 billion euros ($3.76 billion) in credit funds. “From the investor standpoint, you can argue they didn’t get the coupon.” ... Binding Decisions ISDA’s determinations committee was formed in 2009 and makes binding decisions for the market on whether contracts can be triggered. The 15-member group includes representatives from Bank of America Corp., Elliott Management, Morgan Stanley and JPMorgan Chase and Co. There were 2,652 contracts covering $1 billion of Argentina bonds as of July 25, according to the Depository Trust and Clearing Corp. That compares with about $3 billion for Greek bonds when they were triggered in 2012 and $20 billion on Italy’s as of last week. ... EXTRACT ONLY ... FULL @... http://www.bloomberg.com/news/2014-08-01/argentina-default-triggers-1-billion-of-swaps-after-isda-ruling.htmll

Argentina made the payment.

Bank of New York Mellon Corp didn't make the transfer.

Judge's ruling bars the bank.

Perhaps the State should pay the insurance then, because the matter isn't resolved.
One would think there would be avenues of appeal?

ISDA (International Swaps and Derivatives Association) make binding decisions ...but is ISDA impartial?  Is it supposed to be?

Check out the $20 billion bonds associated with Italy!!  That looks an interesting story.

Argentina - Defaults on Debt Repayments on Bonds - 'Vulture' Hedge Funds

Argentina Defaults: Three Points

July 31, 2014

... Argentina failed to reach an agreement with several hedge funds holding its bonds and it defaulted on its debt payments. First, S&P  lowered the country’s rating to “selective default,” which means that Argentina had failed to make some interest payments on its bonds. Then, Argentina’s economy minister ... Axel Kicillof, said that the “vulture” hedge funds had declined to accept Argentina’s offer to swap out their bonds for new ones, and that he was therefore heading home.

http://www.businessweek.com/articles/2014-07-31/argentina-defaults-three-points

Default is a major disaster for a government, but not much will happen right away now that Standard & Poor’s has declared Argentina to be in “selective default.”

S&P (MHFI) took the action today after Argentina’s talks with holdout creditors continued past the end of the 30-day grace period for a $539 million bond payment.

Defaults are usually bad for bond prices. But prices for Argentine bonds soared today ... because investors are increasingly optimistic that Argentina will strike a deal with its creditors. ...
 
http://www.businessweek.com/articles/2014-07-30/what-happens-now-that-argentina-is-in-selective-default

This sounds exciting. 

I've not read up on bonds, but there's a link - here - for anyone that's keen.

Looks like Argentina's borrowed money that it can't pay back.

Doesn't sound too good.

Too tired to try to figure it out beyond that.