What We Do
Sovereign Debt ConsultationSovereign Debt Workouts: Are Stronger CACs All We Need? March 31, 2015
Sovereign Debt Workouts: Are Stronger CACs All We Need? March 31, 2015
New Rules for Global Finance, in partnership with the Centre for International Governance Innovation (CIGI), invites you to participate in the next webinar in this series on Sovereign Debt Restructuring. This is part of a broader global consultation on sovereign debt restructuring.
Tuesday, March 31
10:00 AM – 12:00 PM EDT
Featured Speakers:
Lee Buchheit, Cleary Gottlieb Steen & Hamiliton
Sergio Chodos, Argentina Executive Director, IMF
Leland Goss, International Capital Markets Association (ICMA)
Description:
Last year, the International Capital Markets Association (ICMA) published new standards for sovereign debt bond contracts. These new standards, endorsed by the IMF, include new language for pari passu, creditor engagement and other important elements of bond contracts. Arguably the most critical of these proposed new standards is the stronger “aggregated” collective action clauses (CACs). These new CACs allow a 75 percent majority of bondholders to agree to changes in the terms of the bonds (e.g. extend maturities or reduce principal) which will bind all creditors. As a result, holdout creditors would need more than 25 percent of sovereign bonds to block a restructuring agreement between a sovereign and its bondholders.
This new standard for CACs is positive, but the key question is: Will the stronger CACs be enough to resolve the major challenges in sovereign debt workouts?
Since August 2014, more than half of emerging market countries to issue sovereign bonds (12 od 22) have included this new language, including Ecuador, Kazakhstan and Mexico. Why have some countries issuing debt decided not to include these new standards? Is this because in some cases, particularly for low and middle income economies, acquiring 25 percent of sovereign bonds is easier to do? In the case of Ukraine, stronger CACs might not matter since its largest bondholder, Franklin Templeton, holds almost half of Ukraine’s debt. Do smaller economies need even stronger CACs or would this hurt their access to private capital markets?
Join us for this webinar to investigate these questions
Experts on sovereign debt contracts, Lee Buchheit and Leland Goss, have agreed to share their perspectives and answer questions on this issue. In addition, Sergio Chodos has agreed to share his views and experience as a policy maker. Please bring your questions, comments and ideas!
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To view the full list of past and upcoming webinars, click here:
http://new-rules.org/what-we-do/sovereign-debt-consultation/sovereign-debt-consultation-events