May 2002
Sovereign market awaits court verdicts
In the wake of the Argentine crisis the sovereign credit derivatives market is preoccupied with legal disputes about what triggers a credit event. New definitions from ISDA must bring clarity, though even that might be insufficient to lure back investors.
Three recent high-profile cases involving JPMorgan, along with a
post-Enron reluctance on the part of clients to enter into opaque
off-balance-sheet transactions, might spell the beginning of the
end for sovereign credit derivatives. These are not golden days,
after all, for financial markets plagued with illiquidity and
mistrust.
JPMorgan has issued one public statement maintaining a stout
defence: "JP Morgan fully complied with the plain language and
spirit of the contractual terms of the governing agreements." A
study of the court documents relating to the three cases, and
discussions with lawyers, reveals a dense and complex chain of
arguments that has not yet been fully understood by many market
participants.
The largest case pending against JPMorgan is a suit seeking more
than $90 million in compensatory damages and more than $100 million
in punitive damages filed by Daehan, a Korean investment trust.
Daehan was sold $96 million of 10.20% Emerging Market Basket Notes
in...
This is archived content. Your current settings does not currently allow access to the archive. To gain access visit the subscription page or call our hotline on +44 (0)207 779 8999.
If you are a trialist or subscriber, please enter your username and password at the top right-hand side of euromoney.com
Subscribers to Euromoney benefit from:
Level 1:
- Online access to the past 12 months content
- Tailored RSS news feeds direct to your desktop
- News delivered directly to your mobile device or PC
- Personalised email newsfeed of 'Top stories' and 'Breaking news'
Level 2:
- Exclusive access to euromoney.com - Read the latest issue early online, search for specific developments by region or sector, interrogate the results of Euromoney's benchmark polls, and view the archive dating back to 2000
- 12 monthly issues of Euromoney magazine
- More than 30 specialist research guides free
- The results of Euromoney’s polls and surveys
- Tailored RSS news feeds direct to your desktop
- News delivered directly to your mobile device or PC
- Personalised email newsfeed of 'Top stories' and 'Breaking news'
Click here to subscribe