Thread by @ASCOA

Grab your 🍿, bondholders.

We're talking with two renowned experts—Lee Buchheit and Augusto de la Torre—about the evolution of sovereign debt restructurings, with a spotlight on Ecuador.

We are LIVE with #EcuadorCOA. Join us! as-coa.org/events/soverei…

Lee Buchheit opens by giving an overview of the Latin American debt crisis of the 1980s. When all was said and done, 27 countries worldwide that had to restructure their sovereign debt.

Commercial banks quickly organized themselves into bank advisory groups.

#EcuadorCOA

The commercial bank community did a very good job of disciplining its own. The guiding principle the advisory committees articulated was, everybody has to play ball because if somebody drops out that in effect shifts the burden onto the participating banks.

#EcuadorCOA

So if a creditor began to evidence a "maverick" tendency, that bank would first expect a phone call from its corresponding bank in NYC reminding it of "the brotherhood of bankers." If that failed, the phone would ring and it might be the Federal Reserve chairman.

#EcuadorCOA

We weren't joking about the 🍿, btw.

"You will have nothing left but your regrets and your legal fees."

—Lee Buchheit, describing the sovereign debtor's "ultimate weapon" when dealing with creditors

#EcuadorCOA

Buchheit gives a definition of “odious debt”:

If a dictatorial, tyrannical regime borrows money, does not use it for any public purpose—in effect steals it—that is wrong morally …

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… and it ought to be wrong legally to saddle the poor citizens of that country with an obligation to repay a debt that had been incurred in the name of the state by a klepto-maniacal dictator.

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We may be on the cusp of a systemic sovereign debt crisis of a kind we haven’t seen since the 1980s. … If the situation turns out to be as gristly as the IMF thinks, we could have 10–25 countries forced into a debt restructuring at the same time.

— Lee Buchheit #EcuadorCOA

Lee Buchheit says Argentina has revised its offer "very considerably in favor of the creditors" and declared it their final offer.

President of Argentina Alberto Fernández discussed that "final offer" with us last week. Watch his remarks at #CouncilARG: as-coa.org/watchlisten/vi…

And that wraps up today's #EcuadorCOA discussion!

Many thanks to panelists Lee Buchheit and Augusto de la Torre, our partners @UdlaChannelEc, and all of those who joined us virtually.

You can watch a video of today's event here: bit.ly/2DkfxZ2