Citigroup recently became engulfed in an ongoing battle between Argentina and New York hedge funds led by Paul E. Singer’s Elliott Management. In 2001, Argentina defaulted on a record $95 billion in debt. The majority (92%) of the debt holders agreed to exchange their bonds for new discounted bonds under a 2005 and 2010 restructuring, while others like Elliot’s NML Capital unit held out to seek full payment.
Conflicts of Debt Payment: Citigroup, Argentina, and Judge Griesa
Update: Argentina’s Debt Crisis Continues as Debt Swap Legislation is Proposed
After a rocky summer, Argentina is trying to push itself through its recent debt default by proposing new legislation that could potentially pull the country out of its current financial crisis. Last week, in a speech addressed to the nation, President Cristina Fernández announced a plan for legislation that would allow bondholders to swap “their debt issued under foreign law for bonds of the same value governed by local law.”
Banco Espírito Santo Bailout
After financial turmoil, the Portuguese bank, Banco Espírito Santo (“BES”), will be shut down and bailed out by a plan approved by the European Commission. Part of the bank will remain and continue to operate as Novo Banco; this bank will include healthy assets and senior debts. The troubled portion of BES will continue to house “shareholders and subordinated debtors who will be written down against the bad assets formed mainly of exposure to the rest of the Espírito Santo and to the bank’s Angolan unit.”
Argentina’s Debt Crisis
Last week, Argentina defaulted on its debt for the third time in three decades, setting the country up for a debate on how to move forward. This default is Argentina’s second default in 13 years, and its spiral is causing concern not only in Latin America, but also in the U.S. and Europe. The Argentine stock market has taken a slight hit, which may have global repercussions.
“Transforming Strawberries into Securities:” Investing in Farmland
A new real estate investment trust called the American Farmland Company has popped up. American Farmland is run by a group of investors that includes Thomas S.T. Gimbel, who once headed the hedge fund division of Credit Suisse. As food prices have been on the rise, hedge funds have developed a history of buying up cheap farm land. However, American Farmland is looking to do something that very few have done before: allow ordinary investors to purchase stock in American Farmland. Currently, two other real estate investment trusts—Farmland Partners and Gladstone Land Corporation—are trading on the Nasdaq stock exchange. American Farmland would join them to become the third real estate investment trust that owns and leases farmland to trade on a U.S. stock exchange.
An Executive Summary and Overview of the EB-5 Program
U.S. Citizenship and Immigration Services (USCIS) administers the Immigrant Investor Program, also known as “EB-5,” created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, Congress has allocated 10,000 EB-5 visas for investors designated by USCIS based on proposals for promoting economic growth. Of the 10,000 visas available annually for immigrant investors, 3,000 are reserved for investments in Targeted Employment Areas and another 3,000 are set aside for investment through the Regional Center Program.
Apple Announces Stock Split
On Monday, Apple split its stock, bringing the price of one share down from $645.57 to $92.44. Current owners of Apple stock now have 7 shares for every share they owned prior to the stock split. Stock splits are usually 2-for-1 or 3-for-1 so Apple’s 7-for-1 split is unusual. The result of this split is that “Apple now has more than 6 billion shares of stock outstanding, up from about 860 million shares before the split.”
Secondary Private Equity Investments on the Rise
The rising stock market has increased corporate valuation of companies. This surge has given the secondary private equity market a new life. According to Bloomberg Private Equity M&A database, secondary private equity transactions year-to-date stood at $25.6 billion with a total of 97 deals. Prior to this, the highest activity for secondary private equity market was in 2007 with $114.7 billion in deal value for 316 deals; whereas the lowest activity was in 2009 with $4.1 billion for 82 deals. The private equity market has been criticized as illiquid but now it can sell quickly with only modest discounts to net asset value (NAV).
Comcast and TWC Take Next Step in Proposed Merger
In February, the number one and number two cable providers in the US (Comcast and Time Warner Cable respectively) announced a proposed merger whereby Comcast would acquire TWC. The cable giants have already filed the Hart-Scott-Rodino notification with the DOJ, and on Tuesday, 8 April, they took another step towards completion of the merger by filing Applications and Public Interest Statement with the FCC. The merger must receive approval from both the DOJ and the FCC to proceed. The DOJ’s primary inquiry will be related to anti-trust concerns, whereas the FCC will seek to find that the merger achieves benefits that can only be reached by the combination of the two companies.
As Some of the Bailout Banks Recover, Taxpayers Start to See Some Payback
Some recent news in the financial industry are indicating that bailout banks that received taxpayer money after the 2007-08 financial crisis may be starting to show signals of recovery and paying back some of the investments made by federal governments.