Taking full advantage of social media to press their case, the Novo Note Group of major-league investors that claims the Bank of Portugal acted illegally by retroactively dumping €2.2 billion worth of senior bonds in BES bad bank has released an online tirade headlined “Caveat emptor (Buyer beware): Portugal’s recovery is not all it seems”.
The text warns would-be investors “to be on their guard, for the country’s institutions remain weak and prone to governance failures”.
Revisiting the perceived iniquities of their case (click here) – and insisting that the Bank of Portugal “has failed to meaningfully engage with bondholders upon whom it imposed such significant losses in breach of fundamental legal principles” – the group stresses that “Portugal’s banking system remains frail and despite recent good news on the economic front, in dire need of help to survive”.
It is not immediately clear whether Novo Note’s tactics will get the desired results. There has been no official response, for instance, from the Bank of Portugal. But international sites like Global Capital are predicting the moves could mark a “new horizon in bank collapse litigation – who wins the social media war”.
In simple terms, Novo Note is trying to embarrass Portugal so much that it relents and comes up with a solution for all the money lost.
As the group’s article explains, “the consequences” of the retroactive bond ‘dump’ are not just legal, they have “led to an inherent distrust of Portugal amongst the international community whose help it badly needs if the country’s recovery is to be sustained”.
Financial language is helped along with the imagery of “a house built on poor foundations” that is “likely to show its cracks even if they have been papered over”.
The bottom line is that Portugal’s “continued failure to take action” and satisfy these ‘big financial hitters’ will badly affect the country’s recovery: “Investors need to be mindful that unless things change, the cracks will reappear…”