Clauses & Controversies

Argentina Again The Trump administration says it will do “whatever it takes” to rescue the Argentine peso and bond yields, saving buddy Javier Milei from electoral disaster. We do not think the U.S. Treasury can simply dole out money to Milei. If the administration does not want to go to Congress for permission (it generally does not), and if the Mexican bailouts of 1982 and 1995 are indicators, the U.S. Treasury will ask the Argentines to provide collateral of some sort. (The Falklands, maybe?) If so, holders of Argentine sovereign bonds might wonder whether they are entitled to some collateral too. Sovereign bonds have negative pledge clauses, which generally prevent the borrower from creating new secured debt without securing bondholders on equivalent terms. So, we looked at some of the negative pledge clauses in Argentine bonds. They are weird, but don't seem very protective. These are beautiful clauses, folks, BEAUTIFUL. Looks like the U.S. gets collateral, bondholders don't. Total disaster for them! Producer: Leanna Doty

Ukraine's Expansive "Fiscal Laws" Clause International sovereign bonds, and particularly those issued under English law, often include a clause providing that payments are subject to the applicable "fiscal and other laws." Usually, the clause makes clear this refers to fiscal laws in the “place of payment” (e.g., Luxembourg). Separately, international bonds also provide that, if the issuer imposes any taxes on bond payments, it must "gross up" payments to foreign investors, so the tax does not reduce their payments. Together, the two clauses usually immunize foreign investors from taxes imposed by the issuer but leave room for taxes imposed by the place of payment. Ukraine's bonds are different. They seem to leave room for Ukraine to impose its own "fiscal" law on payments. Arguably, they leave investors subject even to local laws that aren't fiscal in nature. Might this be a source of leverage for the country in its negotiations with GDP warrant holders, who have so far refused to make concessions in restructuring talks? Producer: Leanna Doty

The Greek GDP Warrant Drama Greece’s debt situation has improved remarkably, from default status in 2012 to investment grade in 2025. A few weeks ago though, Bloomberg reported on a brewing drama with the GDP warrants that were offered to investors in the brutal 2012 restructuring. Apparently, Greece has elected to exercise its right to call the warrants, and holders are yelling bloody murder at the low price at which Greece says it is entitled to buy. Every side has lawyered up and claims the other side is acting unreasonably. We speculate wildly on what might actually be going on and what is likely to happen. Producer: Leanna Doty

The discussion dives into the aftermath of Russia's default and the implications of prescription clauses on sovereign bonds. Key questions arise about what constitutes a valid claim against Russia and the complexities of making legal requests in international contexts. The speakers tackle the tricky terrain of statutes of limitations and the impact of war on contractual obligations. They also examine the historical perspective of legal frameworks, highlighting investor challenges in navigating payment rights amidst geopolitical unrest.

Venezuelan debt recovery efforts unfold as funds attempt to enforce judgments, only to find themselves stuck in a bizarre legal loop. The podcast humorously dissects the absurdities of their situation. Moving to the U.S., a controversial proposal suggests unilaterally extending debt maturities, raising alarms about the Treasury's power. The conversation explores the critical importance of independent legal institutions for maintaining financial stability and investor confidence, alongside the ever-volatile dynamics of global governance.

Is There Any Law of State Succession? Syria, Ukraine and Greenland The law of state succession to obligations comes mostly from a different era, when war and conquest were legal and borders changed with some frequency. Today, we are faced with multiple situations where borders might change due to war. Does the law tell us what happens to the debts attributable to the acquired territory? And how do we translate legal rules that evolved in the 18th and 19th centuries into the modern era? Paul Stephan (Virginia), one of the foremost international law experts, joins us to discuss. Producer: Leanna Doty

What if Trump Discovers that Unpaid UK (and French) Debt From WWI? The current administration has tossed concepts such as “special relationships” with allies out the window. The administration seems willing to apply just about any leverage it has to obtain concessions from allies, including concessions that might reduce the US debt. Seen in that light, what will happen when Trump and the Musketeers discover that the UK and France have hundred-year old unpaid debts? With interest, that unpaid debt would now amount to a few trillion dollars. Enforcing these debts would be near impossible, except that the UK and France own a whole bunch of US Treasuries. Could the administration try to force a swap of those Treasuries into longer term obligations? Or try to use the US government's claims against the UK and France as a setoff, reducing payments on US debt held by those governments? Seems loony. But loony is normal these days. Producer: Leanna Doty

What Might a Syrian Debt Restructuring (Eventually) Look Like? There is little doubt that Syria needs to restructure its debt, among other reasons to pave the way for rebuilding after a long and brutal civil war. It strikes us as too early to envision what that process will look like, but we can identify some of the key issues. The country owes a lot to official creditors, especially Iran and Russia. Much of this was off-books and was used for the military or otherwise to support former President Bashar al-Assad's repressive regime. Not surprisingly, we are already hearing the term "odious debt" raised to suggest these debts need not be repaid; there may be a separate doctrine allowing repudiation of certain war-related debts. We talk about whether these (arguable) doctrines of international law have any relevance here and about the potential role of the U.S. in a debt restructuring. Producer: Leanna Doty

User Fees on the US Treasury Strategic Gold Crypto Reserve Trump plans to reduce the US debt. We are missing some of the steps, but here are the ones we have identified so far: 1. Golden passports 2. Tariffs 3. Maybe not tariffs 4. Okay, tariffs 5. Something about gold 6. User fee on treasuries 7. Crypto 8. ??? We speculate about what we are missing. Maybe it’s a red Tesla? Producer: Leanna Doty

Why Do We Care Who is Behind HRB’s Sri Lankan Lawsuit? The Hamilton Bank litigation against Sri Lanka appears to be reaching the end. Or is it? The stays that were granted during restructuring talks have implications for future sovereign debt restructurings, we think. Especially Venezuela’s restructuring, which is going to be a huge undertaking. And then, there may be more drama to come in the HRB lawsuit itself. Sri Lanka says it needs more discovery, apparently to dig into whoever might be behind the lawsuit. Why? Producer: Leanna Doty