Our Sovereign Debt team has assisted clients on the most significant and high-profile issues confronting sovereigns over the last 50 years.
We have been at the heart of the most complex set of sovereign crises to date including those of the Eurozone (Greece, Ireland and Cyprus) as well as that of 2005-2015 Argentina.
Countries all over the world entered 2020 with high levels of debt, both in absolute terms and as a percentage of their GDP. The Covid-19 pandemic is adding an unprecedented burden on all economies and it affects their structure and future performance in complex ways.
How to raise funds, address illiquidity, successfully restructure, and set the world into a path of sustainable development will be critical issues in the coming years. The challenges have increased by the complexity of financing instruments, the range of stakeholders and the rise of policy and compliance requirements in the major financial centres.
The scale of our network and the depth of our expertise means that we can mobilise the right teams quickly to find solutions. Our experience on similar sovereign crises and the associated lessons can be leveraged.
How can we help?
- Anticipate: As a sovereign counterparty shows signs of distress we can help you with your diligence in understanding your exposure and scenario planning.
- Prepare: From experience we know that a rapid and coordinated response is required during a crisis. Key decisions need to be made which will affect the efficiency of your response and the accuracy of your decision-making.
- Insights: We are plugged into ongoing discussions of key stakeholders at the highest levels and are using that intelligence to guide clients on the most effective strategies. This involves active dialogue with international organisations, industry bodies and multilateral agencies.
- Coordination: In the event of a crisis, expertise is required across a number of critical areas to be able to navigate the complexity of sovereign financing instruments, the array of stakeholders and variety of regulatory measures. Our team includes both English and New York qualified lawyers – essential given that these two governing laws underpin global financial markets in tandem.
- Understanding all stakeholders: We’ve acted for arranging banks, creditors, official sector entities, central banks and sovereigns in debt raising, debt management, restructurings, structured and project financings, disputes before national courts, bilateral investment treaty arbitrations and regulatory matters.
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Areas in which we assist clients
Debt Capital Markets
Sovereigns and supranationals continue to use the international capital markets with increasing frequency for their plain unstructured borrowing. We have advised on over 700 sovereign bond issuances by sovereigns, central banks, municipalities and cities over the last 40 years, including Reg S, 144A, fully SEC registered and Sukuks. Our expertise ranges from bond issuances to liability management exercises, exit consents and exchanges in the context of restructurings.
Derivatives and Structured Finance
Banks, sovereigns and supranationals engage in a multitude of derivative and structured finance transactions (including swaps, repos, CDS and other derivatives) involving sovereign bonds or state assets. We have been acting on all of these types of transactions, including some notable ones over disputed collateral ownership. We have advised ISDA for over 25 years including its Determinations Committeesin all cases of sovereign CDSs (with Greece being the most discussed instance).
Sovereign lending work has been a core practice of the firm since the early 1970s and we remain at the forefront with a practice which advises sovereigns and creditors alike. We have an extensive track-record of advising on loans from state-owned banks, commercial banks and sovereigns to other sovereigns, central banks, municipalities and state-owned-enterprises in over 125 countries.
Our restructuring team is known for providing pioneering solutions as well as delivering real commercial results, to banks, insolvency officeholders/trustees and government institutions, lenders and investors holding a broad range of credit instruments.
We have had major roles in all sovereign crises to date including those of the Eurozone (Greece, Ireland and Cyprus) as well as in the earlier Argentina crisis. We acted in all phases of the Greek crisis, from the 2010 Eurozone rescue loan of €80 billion, to Greece’s return to the markets.
Capital and Exchange Controls
In extreme cases, countries that have otherwise open currency markets may choose to restrict capital flows and imposed exchange controls to protect their currency from what is perceived to be an unwarranted risk. In such a case international counterparties of domestic debtors will need clear advice delivered swiftly and consistently to ensure the market reaction is orderly. We have advised a syndicate of the largest global banks on the two most recent such control impositions, that of Cyprus and Greece, through multidisciplinary teams, co-ordinated access to the best local law advice, and communication platforms.
Projects and Asset Finance
Our projects, infrastructure, energy and asset finance practice has extensive experience on transactions where sovereigns are asked to provide support to multilaterals or commercial creditors, including on loans with guarantees from sovereigns and ECA backed loans.
Through financings to the energy sector in many countries, we understand the challenges of expanding energy capacity, maintaining reasonable rates for a national economy, and moving to decarbonisation.
Litigation and Arbitration
We are the only global elite law firm to have a litigation offering in Africa, the Middle East, Asia Pacific, Europe, the US and the UK. We advise on matters of sovereign immunity, capacity and authority, validity of claims, preservation of rights, service on states, attachment of assets and other debt related claims before domestic courts.
We advise on sovereign issues, both at the transaction stage and before national courts, international courts and arbitral tribunals.
Public International Law
Our public international law practice advises sovereigns on the full range of contentious and non-contentious matters arising under public international law, and represents them before international courts and tribunals.
This team includes experts on both public international law and sovereign issues under various national laws, and specialist advisors on the documentation and investment mechanisms for a huge range of financial instruments, including equity and all forms of debt.
Our corporate trustee team advises trustees, agents and custodians in all aspects of the capital markets arena, on new deals, amendments, restructurings and defaults, including litigation. During the famous litigation between Argentina and its holdout creditors, we acted for the trustees and paying agents whom the holdout creditors sought to enjoin from making payments to the consenting creditors.
Financial Services Regulatory
Advising sovereigns and government authorities, central banks and leading financial institutions, we have invested in building a large team that can cover the full range of financial services regulation. We have extensive experience in: bank regulatory regimes including in relation to prudential and tax treatment of banks' sovereign debt holdings; bank recovery and resolution; derivatives; structured finance; payment systems; and regulatory consultations with regulators.
Sanctions, Anti-Money Laundering and Investment Compliance
Our team, which includes several former government officials in the US and Europe, advises financial institutions, funds, corporates, sovereigns, and government agencies on a wide range of trade and sanctions-related issues. We work closely with regulators such as OFAC OFAC, OFSI, BEIS and BIS, amongst others, and have an in-depth understanding of how trade and sanctions matters play out in sovereign transactions.
News & insights
News: 13 JANUARY 2021
Allen & Overy has advised the Republic of Indonesia (the “Republic”) on its SEC-registered global offering of EUR1 billion 1.100% Bonds due 2033, USD1.25 billion 1.850% Bonds due 2031, USD1.25 billion…Read more
News: 30 NOVEMBER 2020
Allen & Overy has advised the joint lead managers in connection with the multi-tranche Reg S offering of EUR4 billion sovereign bonds by the Ministry of Finance of the People’s Republic of China…Read more
Publications: 23 NOVEMBER 2020
In this podcast Yannis Manuelides, head of Allen & Overy’s Sovereign Debt practice, is interviewed by Mitu Gulati of Duke Law School and Mark Weidemaier of UNC Law School.Read more
Publications: 24 JUNE 2020
This week’s episode of G&R Airtime shines the spotlight on the current state of affairs in relation to sovereign bonds and sovereign debt, with a particular focus on Indonesia.Read more
Highly rated for its skillful handling of investment treaty disputes on behalf of both sovereigns and investors.
Chambers Global 2019, Public International Law
Regularly mandated on complex cross-border transactions by eminent lenders, sponsors and borrowers, including public development banks, investment banks, private equity firms and multinational corporates.
Chambers Global 2020, Banking & Finance (Band 1)
Advises on a range of cross-border and sovereign bond issuance matters and is frequently involved in high profile capital raising and IPOs.
Chambers Global 2020, Capital Markets, Debt (Band 1)