Bendy Bonds Are Better (Say it Five Times Fast)

Our guest this week is Ben Heller, one of the most insightful observers of the sovereign debt markets, and someone we often turn to for a sense of the investor’s perspective on the markets. Recently, Ben and a colleague published a proposal for so-called Bendy Bonds – state-contingent debt instruments that automatically give countries a short breathing spell in times of crisis. State-contingent debt is a favorite of many economists, but proposals for new instruments—like GDP-linked bonds—have generally gone nowhere. But there has been a great deal of interest in Bendy Bonds. We talk with Ben about the idea behind Bendy Bonds and about recent events in the markets such as the claim by some that the Pac Man and Redesignation strategies proposed by Argentina in its recent restructuring were innocent attempts to correct for flaws in the latest version of the ICMA CACs. Ben, who was on the key drafting committees for the ICMA CACs, gives us some rare and invaluable legislative history.

https://www.hbk.com/uploads/documents/Bendy-Bonds.pdf

Producer: Leanna Doty