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Clauses & Controversies
Ep 121 ft. Ben Heller
Nov 13, 2023
Delve into Argentina's FRANs, with a drafting glitch leading lucky investors to 100% annual interest. Ben Heller discusses dodgy exit amendments and sovereign states raising defenses. Explore bond structures, market dynamics, and complex financial instruments. Uncover ethical dilemmas in financial agreements and regulations for abuse prevention in financial restructuring.
42:02
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Quick takeaways
- Franz Bonds offered high returns due to Argentina's financial turmoil and mispricings.
- The sovereign debt investments in the Franz Bonds highlighted complexities in legal battles and strategic decision-making.
Deep dives
The Intriguing Instrument of the Franz Bonds
The Franz Bonds, known as Flexible Rate Accrual Notes, were issued by Argentina in 1998 with a unique structure tied to long-term Argentina rates rather than conventional rates like LIBOR. This complex instrument promised stability around par value based on the yield of an Argentina 2006 bond. The bonds' responsiveness to curve shapes and difficulty in hedging led to early exit by some before their value spiked due to Argentina's financial troubles and defaults.
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Discover
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Listen to the best highlights from the podcasts you love and dive into the full episode