#Lebanon Financial Crisis: How Does the Debt Restructuring Work? - Bloomberg

Lebanon Financial Crisis: How Does the Debt Restructuring Work? - Bloomberg:

Sovereign bond restructurings are rarely smooth. Lebanon’s looks like it will be particularly rocky.

The rules underpinning the nation’s looming debt overhaul may complicate efforts to gather enough support to change the terms of its bonds. At the same time, they could protect the country from some of the issues that left Argentina with lengthy court battles.

So say Mark Weidemaier and Mitu Gulati, law professors at the University of North Carolina and Duke University, who published online reports about the nation’s $30 billion of international bonds after reviewing the detailed terms laid out in the Fiscal Agency Agreement. That document has only been available to bondholders at the office of Lebanon’s fiscal agent in Luxembourg.

“Lebanon’s FAA explicitly allows it to do what got Argentina into trouble,” they said in a post on the Creditslips academic blog. The terms make it “more difficult for holdouts to complain when the government pays restructuring participants (and everyone else) while leaving holdouts with nothing,” they said.