The Most Amazing Revolution In spring 1917, the United States government lent money to the new Provisional Government in Russia, which had promised both domestic reform and to maintain the fight against Germany. Within a few short months, the Bolsheviks took over and repudiated all prior international debt. Still unpaid, the loans have now been in default nearly 150 times longer than they were current. We have talked about these loans before, but not about the repeated attempts (in the 1930s and 1990s) to reach a settlement. Some of the loan proceeds went to efforts to keep the Bolsheviks from power? Did the succeeding governments have to repay those debts? Producer: Leanna Doty

Something Black in the Lentils: We are back with our favorite type of podcast — speculation about legal implications built around facts that are constructed entirely from rumor and innuendo. Weird stuff is going on with the Senegalese yield curve. And we wonder whether the weirdness might relate to Senegal’s desire to avoid triggering margin calls on its TRS contracts (which we'd really like to see). If there is some jiggery pokery going on - perhaps with respect to auctions of the three-year maturity - is that bad faith? Possibly, maybe, kinda sorta. We aren't English lawyers. We're barely even lawyers. But maybe there is something strange afoot. Surely it will all soon be disclosed, especially if Senegal defaults and all these contracts go . . . well . . . Producer: Leanna Doty

Foreign Civil War Entanglements Over the years, the U.S. has supported the losing side in numerous foreign civil wars. It has emerged from these entanglements as both a debtor and a creditor. In each case, the U.S. government's formal position has been clear: the post-civil war government succeeds to the rights and obligations of the prior government. That is, the winning side must pay debts incurred by the prior government, and it may enforce rights that accrued to that government. The U.S. has consistently taken this position even when the rights and obligations at issue relate to its attempt to keep the winning side from attaining power (e.g., debts accrued in the context of arms sales to the U.S.-supported side). But pragmatically, the U.S. government's position has been more fluid, ranging from benign neglect (i.e., simply not asserting a claim to payment) to finding technical legal arguments to justify writing off a debt (e.g., deeming the debt uncollectible). Producer: Leanna Doty

If Only YPF’s Bylaws Had Been Governed by Texas Law And… poof! The sound of a $16 billion judgment going up in smoke. We talk about the Second Circuit’s decision in the YPF case, which we read largely as a way to make an excessively large judgment disappear without ruling on any difficult (and recurring) issues of US law. YPF’s shareholders got screwed, but then again their rights were governed by Argentine law. Even in foreign courts, it is hard to win when the sovereign gets to set the rules. We also talk about those fun-lovin’ Texas legislators. Pardner, everything’s bigger in Texas. Except the pre-judgment interest rate. That there is just a whole lot smaller. Has been for 30 some years. Producer: Leanna Doty

The $500 Million American “Financial Aid” to China In 1942, the Americans provided $500 million in financial aid to Chiang Kai-shek’s Nationalist government in China. Described as a “financial counterpart” to Lend-Lease aid, the credit — intended to help stabilize the Chinese economy and support its war effort — did not provide for principal repayment, interest payments, or state a maturity. The apparent intent was to negotiate terms in a post-war settlement of accounts, when the parties could agree on the “benefits to be rendered the United States in return” for the credit. That agreement never happened and, as best we can tell, the status of the credit remains unclear. (Was it a loan? A conditional grant? If the latter, were the conditions fulfilled?) The US doesn’t seem to have ever asserted a right to collect, but we also haven’t seen anything formally relinquishing the potential claim or formally acknowledging the credit as a grant. Producer: Leanna Doty

Ethiopia and Senegal: Debt Shenanigans? A set of recent articles in the FT by sovereign debt guru Joseph Cotterill suggest to us (reading between the lines) debt shenanigans in both Ethiopia and Senegal. We can’t figure out exactly what is going on in these two cases, but there is enough there for us to engage in wild speculation. In Ethiopia, the bondholders seem to be irate that some big player (aka China) is interfering with their deal and they are threatening to use. In Senegal, someone (aka BOAD?) is engaged in a moral hazard play by buying up gobs of local Senegalese debt; this, at a time when the international market has shut out Senegal thanks to disclosure shenanigans. Producer: Leanna Doty

Can We Say Anything Meaningful About a Venezuelan Debt Restructuring? Venezuela must restructure its debt if it, and its new "friends" in Washington DC, want the economy humming again. But how? The debt stock is enormous and the range of claims so vast that normal techniques are unlikely to work. And typically, before anything could happen, the IMF would need to go in and assess the actual situation on the ground. All this takes time. But we imagine that the folks in Washington DC want to declare their adventure a success, and soon. Is that impulse consistent with an orderly, comprehensive debt restructuring? For that matter, what would a restructuring look like if we also assume that Washington wants to line its own pockets with Venezuelan oil revenues, and perhaps to give preferential treatment to oil major creditors (to entice them back into Venezuela)? We don’t have answers — but we suspect that those folks in DC don’t either. Producer: Leanna Doty

Are CACs Unilateral Modification Clauses? We have always understood the collective action clause (CAC) in a sovereign bond to allow the bond issuer to propose a modification to the bond, which will bind everyone if approved by the requisite proportion of holders. Typically the sovereign is proposing to restructure its debt. This is more or less what bonds governed by NY law say, but bonds governed by English law appear to allow bondholders to gang together to modify the bond without the issuer's consent. Can that be right? We don't really think so, but we don't see anything in the text of the standard CAC in English law bonds that requires issuer consent. Imagine a Euro area issuer is nearing crisis and holders of its local law debt decide to switch their bonds to, say, English law. Can they do this unilaterally? Maybe so. Producer: Leanna Doty

Will the Flip Clause Enter the Canon? Contract innovation is rare in sovereign debt markets, so we are interested whenever someone adds a new clause to the existing set of canonical forms. A number of innovations have appeared in 2025, one of which is the "flip clause." The clause allows investors to opt out of the governing law and enforcement jurisdiction initially chosen in the debt instrument. We have some questions about the clause and doubt that in its current form it will gain widespread acceptance. Right now, it seems more symbol than substance — a way to metaphorically flip off the New York legislature. Producer: Leanna Doty

Imperial (Defaulted) Chinese Bonds (Again) Yes, one of us might have sworn up and down that we would never do another episode about defaulted Imperial Chinese bonds. But a brand new case out of the DC federal courts has changed our minds. The case got the back of the hand from the district judge, but the arguments being made were not as weak as a quick glance at the opinion might suggest. Dare we hope for the entertainment value provided by an amicus brief filed by the Trump administration in support of the plaintiffs? Producer: Leanna Doty