1. The Evolution of Bonding Technology, Creditor Committees and the IMF
- Author:
- James A. Haley
- Publication Date:
- 04-2016
- Content Type:
- Working Paper
- Institution:
- Centre for International Governance Innovation
- Abstract:
- This paper reviews a range of issues associated with proposals for creditor engagement clauses (CECs) in sovereign bond contracts. CECs have moved onto the international policy agenda in the wake of the recent introduction of model “second-generation” collective action clauses (CACs) designed to address problems highlighted by the protracted litigation between Argentina and its holdout creditors. Speci cally, the new CACs should limit the ability of holdout creditors to impede restructurings acceptable to a supermajority of creditors and address the problematic interpretation of pari passu language that has plagued the Argentina debt restructuring. However, the introduction of these clauses, building on the foundation laid a decade ago by Mexico’s innovation of rst-generation CACs, has led some observers to express concerns that the sovereign debt restructuring playing eld has become “tilted” to the bene t of sovereign borrowers. Recent contractual innovations should be balanced, these experts contend, with CECs requiring sovereign issuers to convene and negotiate with creditor committees.
- Topic:
- International Security and Digital Economy
- Political Geography:
- Global Focus