Welcome to the official website of the Association of Bondholders of BTA Bank or Astana Finance (ABBA).

The purpose of the ABBA is to:-

(1)  Form a bloc of retail bond holders that must be bargained with in the debt restructuring.
(2)  Provide a forum for the dissemination of information to retail bond holders.
(3)  Establish a class to pursue collective action law suits.

Background

ABBA is a non-profit body directed by activist bond-holders, including investment bankers and finance and litigation lawyers.  ABBA also has a close association with a third-party litigation funder.

ABBA believes that:-

(a) Properly organized, retail bond-holders will be the most potent force in the debt restructuring process. Retail investors hold 70% of the Eurobonds issued by these entities.

(b) Retail bond-holders must act to protect their own interests. Those interests will not be effectively actioned by trustees.

(c) The failure of Kazakhstan’s financial institutions is referable to the inaction of the Kazakh regulatory regime and the neglect of auditors.

(d) The recent serial default of Kazakhstan’s banks suggests an orchestrated campaign to impute the costs of regulatory failure and the corruption of bank management to creditors.

(e) Ultimately bond-holders may be better served to bankrupt these entities and to reserve their legal rights.

Lessons From Ecuador

The recent, deliberate default of Ecuador is an ominous portent for emerging capital markets. But lessons can be learned from that case, which resulted in a disastrous outcome for bond-holders.

The first lesson is bond-holders must act early and in concert to protect their interests, because it is unlikely the trustee will do so.  As Felix Salmon has noted in his Reuters blog: “One of the problems is that when trustees are chosen, they’re generally picked not on the basis of how hard they’re likely to fight for bondholders”.  The second lesson is that an issuer convinced (perhaps by its investment bankers) it will not be able to access the debt capital markets for years in any event, is unlikely to be swayed by “reputation risk” arguments.

The consequence is that bond-holders must be prepared to hold to a hard line.  If that results in the bankruptcy of the issuer and legal action against its advisers, then so be it.  Do not forget that Ecuador also professed a desire for a “friendly” debt restructuring.

Take Action, Join ABBA

If you are a retail holder of bonds issued by BTA Bank or Astana Finance, then ABBA wants your proxy to represent you in the debt restructuring negotiations. After that process is concluded, ABBA will remain as a representative body of those bond-holders that wish to join in class action law suits.  If you want to be represented by ABBA please contact us on info@kzbonds.com.