1,721,211 research outputs found
The Price of Cheeky Contracting
Full text linkAn implication of the incompleteness of contracts is that there are going to be gaps and ambiguities that either side can exploit. We ask whether the expectation that a counterparty is likely to act aggressively in its use of contract language impacts the price that market participants attach to that contract. To do our analysis, we look at how markets price contract terms for the perennial “bad boy” of the sovereign debt markets, the Republic of Argentina. The results are consistent with a market penalty for cheeky contracting
Evaluating the 2013 Euro CAC experiment
Full text linkOn January 1, 2013, it became mandatory that every new sovereign bond issued by a member of the European Monetary Union include a new contract clause called a Collective Action Clause or CAC. This, we believe, constituted the biggest one-time change to the terms of sovereign debt contracts in history, impacting a market of many trillions of euros. And it was not just that the change was big in terms of the size of the market it impacted; it was big in terms of its impact on the documentation of each individual Euro area sovereign bond contract. To illustrate, prior to January 1, 2013, all of the terms of a local-law Irish sovereign bond fitted on about a page and a half; the full document was about three pages long. After January 1, 2013, the document was twenty pages long; almost all of that space taken by the new CAC term. In terms of words on the page, it was a big change. But did it do anything meaningful? And, more importantly, did it do what it was intended to do
The Puzzle of PDVSA Bond Prices
Full text linkMarket reports in the summer of 2016 suggest that Venezuela is on the brink of default on upwards of $65 billion in debt. That debt comprises of bonds issued directly by the sovereign and those issued by the state-owned oil company PDVSA. Based on the bond contracts and other legal factors, it is not clear which of these two categories of bonds would fare better in the event of a restructuring. However, market observers are convinced — and we agree — that legal and contractual differences would likely impact the payouts on the bonds if Venezuela defaults. Using a comparison of recent weekly yields for roughly similar PDVSA and pure sovereign bonds, we attempt to gain some insights into the value investors assign to the legal differences between these two categories of bonds
The Price of Law: The Case of the Eurozone Collective Action Clauses
Full text linkWe analyze the price effect of the introduction of Collective Action Clauses (CACs) in all newly issued sovereign bonds of Eurozone countries as of January 1, 2013. By allowing a majority of creditors to modify payment obligations, such clauses reduce the likelihood of holdouts while facilitating strategic default by the sovereign. We find that CAC bonds trade in the secondary market at lower yields than otherwise similar no-CAC bonds. The yield differential widens in countries with worse ratings and in those with stronger legal systems. The results suggest that CACs are seen as pro- rather than anti-creditor provisions
Pricing Contract Terms in a Crisis: Venezuelan Bonds in 2016
Full text linkAs of this writing in June 2016, the markets are predicting Venezuela to be on the brink of default. On June 1, 2016, the 6 month CDS contract traded at about 7000bps which translates into a likelihood of default of over 90%. Our interest in the Venezuelan crisis is that its outstanding sovereign bonds have a unique set of contractual features that, in combination with its near-default status, have created a natural experiment. This experiment has the potential to shed light on one of the long standing questions that sits at the intersection of the fields of law and finance, the question of the degree to which financial markets price contract terms. We find evidence to suggest that at least within the confines of a near-default scenario, the markets are highly sensitive to even small differences in contract language
Institutions and the crisis
Full text linkThis book collects the contributions of the speakers at the conference ‘Institutions and the Crisis’, which was held at the EUI in Florence, Italy, on 26 April 2018.This book critically analyses, reviews and debates the most salient elements and gaps of Europe’s post-crisis institutional architecture, particularly: -- how European institutions managed the crisis; -- the role of courts in the crisis, and -- the Eurozone’s institutional prospects.-- The Contributors vii
-- Acknowledgements xiii
-- Preface xv
-- Keynote Speech - Euro area reform: reflections on an initiative, 1, Jean Pisani-Ferry
-- Dinner Speech - Europe and financial crises in the future, 27, Natacha Valla
-- PART I - A Look Back: Evaluating European Institutions’ Crisis Management 35
-- Official Lending in the Euro Area: A Look Back, Aitor Erce 37
-- Regulatory Integration and Political Subordination, 57, Tuomas Saarenheimo
-- The European Court of Auditors and the EU’s Developing Economic and Financial Architecture, Baudilio Tomé Muguruza 69,
-- Why Has Euro Crisis Management Been So Hard?, Jeromin Zettelmeyer 83
-- PART II - Disentangling The Crisis And The Courts 93
-- Use of the Local Law Advantage In the Restructuring of European Sovereign Bonds, Lee C. Buchheit 95
-- Judicialization of the Euro Crisis? A Critical Evaluation, Bruno De Witte 103
-- Paper Tigers (or How Much Will Courts Protect Rights in a Financial Crisis?), Mitu Gulati & Georg Vanberg 111
-- From Form to Substance: Judicial Control on Crisis Decisions of the EU Institutions (with a focus on the Court of Justice of the European Union), Chiara Zilioli 133
-- PART III - The Way Forward: The Eurozone’s Institutional Prospects 149
-- Macro Rates Views: Is EMU ‘Break-Up’ Risk Out For Good?, 151, Francesco U. Garzarelli
-- Institutions and the Crisis, Wolfgang Münchau 163
-- Deepening of EMU: Some Topical Considerations, Thomas Wieser 173
-- Putting the Cart before the Horse? A critical appraisal of the European Finance Minister idea, Maria Patrin and Pierre Schlosser 183
-- Conference Programme 19
Going Beyond Counting First Authors in Author Co-citation Analysis
Full text linkThe present study examines one of the fundamental aspects of author co-citation analysis (ACA) - the way co-citation
counts are defined. Co-citation counting provides the data on which all subsequent statistical analyses and mappings
are based, and we compare ACA results based on two different types of co-citation counting - the traditional type that
only counts the first one among a cited work's authors on the one hand and a non-traditional type that takes into
account the first 5 authors of a cited work on the other hand. Results indicate that the picture produced through this non-traditional author co-citation counting contains more coherent author groups and is therefore considerably clearer. However, this picture represents fewer specialties in the research field being studied than that produced through the traditional first-author co-citation counting when the same number of top-ranked authors is selected and analyzed. Reasons for these effects are discussed
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