GDP-linked warrants issued as part of Ukraine’s
$18 billion debt exchange contain unprecedented creditor
protections, making them the closest thing possible to
having equity in a country.
The instrument, which gives a return based on the issuing
country’s economic growth, has featured in other
sovereign restructures. But never before has it been the key
component of a successful exchange offer.
On November 12, Ukraine completed its restructure of 14
eurobond tranches as a condition of its bailout
by the IMF.
A new approach to holdouts, which involved reducing their
leverage such that they would always be worse-off, allowed the
cash-strapped government to overcome potential problems under
its single series collective action clauses (CACs). But Andrew
Wilkinson, partner at
Weil Gotshal & Manges which advised the ad hoc
creditors committee, said the upside instrument is what really
got the deal done.
"It was an offer that bondholders were prepared...