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Clauses & Controversies
Ep 135 ft. Ben Heller
Apr 29, 2024
Featuring Ben Heller, the podcast delves into El Salvador's unique bond issuance with a warrant tied to IMF deal and credit rating. The discussion highlights the complexities of financial warrants, governance-linked bonds, and the debate surrounding bond proceeds for buybacks. It also emphasizes the importance of transparent EM debt contracts for investor clarity.
33:27
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Quick takeaways
- El Salvador issued a unique bond with a warrant attached to signal seriousness about IMF program, raising questions about default scenarios.
- IMF has caution about governance-linked bonds and specific criteria as performance benchmarks, highlighting challenges in implementing performance-linked instruments.
Deep dives
Naive Bokele's Bizarre Bond Issued by El Salvador: An Overview
El Salvador issued a unique bond with a warrant attached to address concerns in the market about the government's policy settings. The warrant pays based on compliance with performance criteria linked to an IMF program or a ratings upgrade. This bond was designed as a signal of seriousness about pursuing an IMF program, but it raised questions about potential default scenarios and incentives for behavior.
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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