Bonus report: Cuban debt –
(Full access for Members only)
Bonus Report: Cuban debt – the awakening?
6 February 2020
Fidel Castro's Cuba defaulted on debt totalling USD 63bn. However, its financial self-interest eventually brought the country to the negotiating table. Without a settlement of old debt, new funding sources are blocked.
Between 2011 and 2015, Cuba signed compromise agreements for 85% of its entire outstanding debt. Only two categories of debt remain outstanding:
- Commercial debt totalling USD 9.4bn, mostly organised in the "London Club".
- Pre-Castro debt, with an issue value of probably just USD 150m.
Hardly anyone would know that some defaulted Cuban debt securities are listed on a European stock exchange. Also, there is at least one focussed Cayman Islands-based investment fund, and you can even invest in Cuban land expropriation claims.
I wrote about the subject in my 2006 book, which was prescient in some aspects and too early in others. Today's report is an exclusive update with behind-the-scenes information. 2020/21 is likely going to bring significant new developments for claims against the Cuban government. It's an extremely illiquid and difficult-to-trade asset class, but a fascinating and entertaining one. Prices are currently quite low and could yield a 4 to 6 times return – provided you find a seller.
Defaulted sovereign debt can be a lucrative asset class, but most investors have no idea it even exists. This report makes for a fascinating case study, and it will provide you with a good understanding of the key issues. Its lessons may be applied to other, more liquid situations with more liquid and easier-to-access trading, such as Venezuelan debt (which this website might report about in the future).
Since it's currently very difficult to invest in Cuban debt, I am making this one of my two annual "Bonus Reports". It doesn't count towards the ten investment ideas that I deliver to my Members every year.
Connoisseurs of the exotic and the obscure – read on!
What readers said about this report
Firstly, I would like to express to you the great work you have done in gathering all the info in the Cuban report (something I forgot to mention). Extreme great work.
Great report on Cuban debt. Thanks for the deep and informative research. You report was particularly germane in light of the most recent Argentine debt crises.
Just signed up and read your Cuban report with fascination. Look forward to doing some more investigating.