Well, who told these sovereigns…
Ivory Coast (November 30 reopening of 2032 bonds, governed by New York law):
The Securities are unsecured. The Securities constitute direct, general, unconditional and unsecured and unsubordinated obligations of the Republic ranking pari passu, without any preference among themselves with all other outstanding, unsecured and unsubordinated obligations, present and future, of the Republic.
Serbia (November 19 issue of 2017 bonds, governed by English law):
The Notes will constitute direct, unconditional and (subject to the provisions of a negative pledge covenant described below) unsecured obligations of the Issuer. The Notes rank and will rank pari passu among themselves and at least pari passu in right of payment with all other present and future unsecured obligations of the Issuer, save only for such obligations as may be preferred by mandatory provisions of applicable law. The full faith and credit of the Issuer is pledged to the due and punctual payment of all amounts due in respect of the Notes.
Mongolia (November 21 medium-term note programme, New York law):
The Notes and any relative Receipts and Coupons are direct, unconditional, unsubordinated and (subject to the provisions of Condition 4) unsecured obligations of the Issuer and rank and will rank pari passu, without preference among themselves, with all other unsecured and unsubordinated External Indebtedness (as defined in Condition 10) of the Issuer, from time to time outstanding.
Costa Rica (November 16 issue of 2023 bonds, New York law):
The Notes will constitute general, direct, unconditional and unsecured Public External Indebtedness of the Republic and will rank pari passu in right of payment, without any preference among themselves, with all unsecured and unsubordinated obligations of the Republic, present and future, relating to Public External Indebtedness of the Republic. The Republic has pledged its full faith and credit for the due and punctual payment of all amounts due in respect of the Notes.
Ukraine (November 26 issue of 2022 bonds, English law):
The Notes constitute direct, unconditional and, subject to the provisions of Condition 3 (Negative Pledge), unsecured obligations of the Issuer and (subject as aforesaid) rank pari passu without any preference among themselves. The payment obligations of the Issuer under the Notes shall rank at least pari passu with all other unsecured and unsubordinated obligations of the Issuer, present and future, save only for such obligations as may be preferred by mandatory provisions of applicable law.
Argentina (1994 Fiscal Agency Agreement, the “FAA bonds”, New York law):
The Securities will constitute (except as provided in Section 11 below) direct, unconditional, unsecured and unsubordinated obligations of the Republic and shall at all times rank pari passu and without any preference among themselves. The payment obligations of the Republic under the Securities shall at all times rank at least equally with all its other present and future unsecured and unsubordinated External Indebtedness (as defined in this Agreement).
Spot the differences.
That’s a selection of pari passu clauses in prospectuses for sovereign debt issued in the six weeks or so since the Second Circuit ruling. Plus, for reference, the clause in the original Argentine holdout debt.
We’re grateful to Mitu Gulati, law professor at Duke University, for gathering together these new bond issues. Gulati also makes a very interesting point: these clauses do not show sudden change. They are not markedly different to ones used before the Argentina litigation exploded on to the front pages.
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