Collective Action Clauses And The Restructuring Of Sovereign Debt
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Collective Action Clauses And The Restructuring Of Sovereign Debt
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Author : Patrick S. Kenadjian
language : en
Publisher: Walter de Gruyter
Release Date : 2013-08-01
Collective Action Clauses And The Restructuring Of Sovereign Debt written by Patrick S. Kenadjian and has been published by Walter de Gruyter this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-08-01 with Law categories.
The volume contains articles based on presentations given at a conference hosted by the Institute for Law and Finance of Goethe University on October 27, 2011. Collective action clauses are an example of the typical dichotomy of financial regulation: While the problems are economic in nature, the solutions need to be implemented by law. The Institute for Law and Finance strives to bring together law and finance in order to foster a better mutual understanding of both disciplines and to improve the regulation of financial markets. Thus, the organizers are particularly pleased that eminent experts from the fields of law and finance agreed to participate in the event and to share their views on and experiences with collective action clauses. The presentations given at the conference have been updated in 2012 to reflect recent developments.
Sovereign Bond Restructuring
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Author : Kenneth Kletzer
language : en
Publisher: International Monetary Fund
Release Date : 2003-06-01
Sovereign Bond Restructuring written by Kenneth Kletzer and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003-06-01 with Business & Economics categories.
This paper compares the restructuring of sovereign bonds with and without collective action clauses. One conclusion is that collective action clauses can allow efficient debt renegotiation in a formal model of sovereign debt renegotiation while unanimity rules offer incentives for opportunistic behavior by bondholders that leads to inefficient outcomes. With collective action clauses, the mutual gains from renegotiation can be internalized by bondholders so that the holders of each bond issue have incentives to participate in a collective debt restructuring. The analysis abstracts from transactions costs, and the last conclusion might well be sensitive to renegotiation and coordination costs.
Strengthening The Contractual Framework To Address Collective Action Problems In Sovereign Debt Restructuring
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Author : International Monetary Fund
language : en
Publisher: International Monetary Fund
Release Date : 2014-02-09
Strengthening The Contractual Framework To Address Collective Action Problems In Sovereign Debt Restructuring written by International Monetary Fund and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-02-09 with Business & Economics categories.
This paper identifies contractual reforms designed to address collective action problems in sovereign debt restructuring. Since any decisions regarding the design of contractual provisions will need to be made by the sovereign issuer and its creditors, it is recognized that the Fund’s primary role will be to facilitate agreement on the design and use of these provisions.
Sovereign Bond Restructuring
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Author : Kenneth M. Kletzer
language : en
Publisher:
Release Date : 2008
Sovereign Bond Restructuring written by Kenneth M. Kletzer and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
This paper discusses the collective action problem in sovereign debt restructurings using a benchmark model of sovereign debt renegotiation. It considers the welfare comparison of outcomes sustainable under collective action clauses and under governing law that requires the unanimous agreement of bondholders to repayment revisions. One conclusion is that collective action clauses allow the implementation of an efficient renegotiation equilibrium for the model economy while unanimity rules provide incentives for opportunistic behavior by individual bondholders that leads to inefficient outcomes. The potential role for a multilateral sovereign debt restructuring mechanism (SDRM) is also discussed. It is argued that the establishment of an official international bankruptcy tribunal that collectively restructures all of a country's debt may not improve upon the universal adoption of collective action clauses for sovereign bond issues. With collective action clauses, mutual gains from collective renegotiation are internalized so that sufficient incentives exist for the private formation of bondholder councils to restructure various debt issues together. The approach abstracts from transactions costs, and the last conclusion might well be sensitive to renegotiation and coordination costs.
Collective Action Clauses In Sovereign Bond Contracts Encouraging Greater Use
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Author : International Monetary Fund. Policy Development and Review Dept.
language : en
Publisher: International Monetary Fund
Release Date : 2002-06-06
Collective Action Clauses In Sovereign Bond Contracts Encouraging Greater Use written by International Monetary Fund. Policy Development and Review Dept. and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002-06-06 with Business & Economics categories.
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The Restructuring Of Sovereign Debt Assessing The Benefits Risks And Feasibility Of Aggregating Claims
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Author : International Monetary Fund. Legal Dept.
language : en
Publisher: International Monetary Fund
Release Date : 2003-04-09
The Restructuring Of Sovereign Debt Assessing The Benefits Risks And Feasibility Of Aggregating Claims written by International Monetary Fund. Legal Dept. and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003-04-09 with Business & Economics categories.
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Would Collective Action Clauses Raise Borrowing Costs
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Author : Barry Eichengreen
language : en
Publisher: World Bank Publications
Release Date : 2000
Would Collective Action Clauses Raise Borrowing Costs written by Barry Eichengreen and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2000 with Bonds categories.
Abstract: June 2000 - Collective action clauses raise borrowing costs for low-rated borrowers and lower them for high-rated borrowers. This result holds for all developing country bonds and also for the subset of sovereign bond issuers. It is easy to say that the International Monetary Fund should not resort to financial rescue for countries in crisis; this is hard to do when there is no alternative. That is where collective action clauses come in. Collective action clauses are designed to facilitate debt restructuring by the principals - borrowers and lenders - with minimal intervention by international financial institutions. Despite much discussion of this option, there has been little action. Issuers of bonds fear that collective action clauses would raise borrowing costs. Eichengreen and Mody update earlier findings about the impact of collective action clauses on borrowing costs. It has been argued that only in the past year or so have investors focused on the presence of these provisions and that, given the international financial institutions' newfound resolve to bail in investors, they now regard these clauses with trepidation. Extending their data to 1999, Eichengreen and Mody find no evidence of such changes but rather the same pattern as before: Collective action clauses raise the costs of borrowing for low-rated issuers but reduce them for issuers with good credit ratings. Their results hold both for the full set of bonds and for bonds issued only by sovereigns. They argue that these results should reassure those who regard collective action clauses as an important element in the campaign to strengthen international financial architecture. This paper - a product of the Development Prospects Group - is part of a larger effort in the group to analyze international capital flows. The study was funded by the Bank's Research Support Budget under the research project Pricing of Bonds and Bank Loans in the Market for Developing Country Debt. The authors may be contacted at eichengr@@econ.berkeley.edu or amody@@worldbank.org.
A New Approach To Sovereign Debt Restructuring
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Author : Anne O. Krueger
language : en
Publisher: International Monetary Fund
Release Date : 2002-04-16
A New Approach To Sovereign Debt Restructuring written by Anne O. Krueger and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002-04-16 with Business & Economics categories.
In recent years there has been extensive discussion inside and outside the IMF on the need to develop a new approach to sovereign debt restructuring. Exploring ways to improve the sovereign debt restructuring process is a key part of the international community’s efforts to strengthen the architecture of the global financial system. This pamphlet by IMF First Deputy Managing Director Anne O.Krueger draws together the latest IMF thinking on the controversial issue in a single publication.
Progress Report On Inclusion Of Enhanced Contractual Provisions In International Sovereign Bond Contracts
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Author : International Monetary Fund
language : en
Publisher: International Monetary Fund
Release Date : 2015-09-18
Progress Report On Inclusion Of Enhanced Contractual Provisions In International Sovereign Bond Contracts written by International Monetary Fund and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-09-18 with Business & Economics categories.
As part of the Fund’s ongoing work on sovereign debt restructuring, in October 2014 the Executive Board endorsed the inclusion of key features of enhanced pari passu provisions and collective action clauses (CACs) in new international sovereign bonds.1 Specifically, the Executive Board endorsed the use of: (i) a modified pari passu clause that explicitly excludes the obligation to effect ratable payments and (ii) an enhanced CAC with a menu of voting procedures, including a “single-limb” voting procedure that enables bonds to be restructured on the basis of a single vote across all affected instruments, a two-limb aggregated voting procedure and a series-by-series voting procedure.
Sovereign Debt Restructuring Recent Developments And Implications For The Fund S Legal And Policy Framework
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Author : International Monetary Fund. Asia and Pacific Dept
language : en
Publisher: International Monetary Fund
Release Date : 2013-04-26
Sovereign Debt Restructuring Recent Developments And Implications For The Fund S Legal And Policy Framework written by International Monetary Fund. Asia and Pacific Dept and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-04-26 with Business & Economics categories.
his paper reviews the recent application of the Fund’s policies and practices on sovereign debt restructuring. Specifically, the paper: • recaps in a holistic manner the various policies and practices that underpin the Fund's legal and policy framework for sovereign debt restructuring, including on debt sustainability, market access, financing assurances, arrears, private sector involvement (PSI), official sector involvement (OSI), and the use of legal instruments; • reviews how this framework has been applied in the context of Fund-supported programs and highlights the issues that have emerged in light of recent experience with debt restructuring; and • describes recent initiatives in various fora aimed at promoting orderly sovereign debt restructuring, highlighting differences with the Fund’s existing framework. Based on this stocktaking, the paper identifies issues that could be considered in further depth in follow-up work by staff to assess whether the Fund’s framework for debt restructuring should be adapted: • first, debt restructurings have often been too little and too late, thus failing to re-establish debt sustainability and market access in a durable way. Overcoming these problems likely requires action on several fronts, including (i) increased rigor and transparency of debt sustainability and market access assessments, (ii) exploring ways to prevent the use of Fund resources to simply bail out private creditors, and (iii) measures to alleviate the costs associated with restructurings; • second, while creditor participation has been adequate in recent restructurings, the current contractual, market-based approach to debt restructuring is becoming less potent in overcoming collective action problems, especially in pre-default cases. In response, consideration could be given to making the contractual framework more effective, including through the introduction of more robust aggregation clauses into international sovereign bonds bearing in mind the inter-creditor equity issues that such an approach may raise. The Fund may also consider ways to condition use of its financing more tightly to the resolution of collective action problems; • third, the growing role and changing composition of official lending call for a clearer framework for official sector involvement, especially with regard to non-Paris Club creditors, for which the modality for securing program financing commitments could be tightened; and • fourth, although the collaborative, good-faith approach to resolving external private arrears embedded in the lending into arrears (LIA) policy remains the most promising way to regain market access post-default, a review of the effectiveness of the LIA policy is in order in light of recent experience and the increased complexity of the creditor base. Consideration could also be given to extending the LIA policy to official arrears.