Veteran Lawyer Says Emerging-Market Debt Is Headed for Trouble - Bloomberg:
For developing countries facing down creditors, Lee Buchheit was the cavalry. During his 43-year career at Cleary Gottlieb Steen & Hamilton LLP, the quick-witted restructuring lawyer gained a reputation for shattering investors’ dreams of sky-high returns.
Buchheit, 68, brought arcane legal terms such as collective action clauses and asset protection orders into modern debt markets. He deployed the former to spur a settlement for Greece, enabling a supermajority of creditors to forge an agreement that was binding on all bondholders. Buchheit applied the latter in Iraq to force U.S. investors to divest from local assets.
Now retired from Cleary, the Pittsburgh native has a frightening prognosis for the coming decade: He foresees the biggest string of defaults since the early 1980s. He blames the rise of bullet bonds, noncallable debt instruments that pay back the entire principal at the final maturity date. In an interview, Buchheit spoke about what he’s learned over his career and the restructurings he sees on the horizon.
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