- Cuba has signed agreements for debt owed to Russia, China, and a host of other foreign debtors. As the largest claim holder, Russia was the first to agree to a solution, which is why it got the worst deal – just 10% repayment with generous payment terms, with the remaining 90% of the debt forgiven. Japan (with smaller claims) managed to get Cuba to agree to a repayment of 20% of the outstanding claim. Up to now, Cuba has negotiated agreements for USD 53bn of old debt, or about 85% of the outstanding claims. At times when Cuban debt was still trading more actively, these claims attracted prices of up to 42% of the outstanding amount.
- The last parties to agree to a deal (the so-called “hold-outs”) usually get the best deal. Such was the case with Argentina, which had defaulted on USD 93bn of sovereign debt in 2001. During the first wave of debt restructuring, the country settled with 93% of the bond holders and agreed to repay them 25-30% of the original amount. The remaining 7% had to wait until 2016 and go through the international court system, but repaid them between 75-100% of the original amount. Elliott Management, the New York hedge fund, famously made around USD 2bn in profit from its investment in defaulted Argentinean bonds, which it had picked up for the proverbial pennies on the dollar.
Source: The Cuba Files – Court Documents For Distressed Debt Investors (Undervalued Shares)
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