Collective Action Clauses In Sovereign Bond Contracts Encouraging Greater Use
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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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Third Progress Report On Inclusion Of Enhanced Contractual Provisions In International Sovereign Bond Contracts
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Author : International Monetary Fund. Legal Dept.
language : en
Publisher: International Monetary Fund
Release Date : 2017-12-15
Third Progress Report On Inclusion Of Enhanced Contractual Provisions In International Sovereign Bond Contracts 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 2017-12-15 with Business & Economics categories.
The IMF Executive Board endorsed in October 2014 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 provision that explicitly excludes the obligation to effect ratable payments, and (ii) an enhanced CAC with a menu of voting procedures, including a “single-limb” aggregated 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.2 Directors supported an active role for the IMF in promoting the inclusion of these clauses in international sovereign bonds.3 The IMFC and the G20 further called on the IMF to promote the use of such clauses and report on their inclusion. Since that time, the IMF has published periodic progress reports on inclusion of the enhanced clauses.4 These reports found that since the Executive Board’s endorsement, substantial progress had been made in incorporating the enhanced clauses, with approximately 85 percent of new international sovereign bond issuances since October 2014 (in nominal principal amount) including such clauses. The reports also found that there was no observable market impact on inclusion of the enhanced clauses. However, the reports noted that the outstanding stock without the enhanced clauses remained significant, with issuers showing little appetite for liability management exercises to accelerate the turnover. This paper provides a further update on the inclusion of the enhanced clauses and on the outstanding stock of international sovereign bonds as of September 30, 2017. Section II reports on the inclusion of these enhanced provisions, finding that the vast majority of issuers are including these clauses, with only a few countries standing out against the market trend. Section II also provides an update on the outstanding stock, indicating that while the percentage of the outstanding stock with the enhanced clauses is increasing, a significant percentage of the stock still does not and little action has been taken by issuers to increase the rate of turnover. Section III briefly reports on the use of different bond structures, and Section IV describes the staff’s ongoing outreach efforts and next steps.
Fourth Progress Report On Inclusion Of Enhanced Contractual Provisions In International Sovereign Bond Contract
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Author : International Monetary Fund. Legal Dept.
language : en
Publisher: International Monetary Fund
Release Date : 2019-03-21
Fourth Progress Report On Inclusion Of Enhanced Contractual Provisions In International Sovereign Bond Contract 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 2019-03-21 with Business & Economics categories.
This paper reports on progress in inclusion of enhanced collective action clauses and modified pari passu clauses as of end-October 2018. The report finds that enhanced CACs have now become the market standard, with only a few issuers standing out from the market trend. Around 88 percent of international sovereign bonds (in aggregate principal amount) issued since October 2014 in the main jurisdictions of New York and England include such clauses. The modified pari passu clause continues to be incorporated as a package with the enhanced CACs, with few exceptions. In line with findings in previous reports, the inclusion of enhanced CACs does not seem to have an observable pricing effect, according to either primary or secondary market data. The outstanding stock of international sovereign bonds without enhanced CACs remains high, with about 39 percent of the outstanding stock including enhanced CACs.
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.
Bond Restructuring And Moral Hazard
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Author : Torbjörn Becker
language : en
Publisher: International Monetary Fund
Release Date : 2001-08
Bond Restructuring And Moral Hazard written by Torbjörn Becker 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 2001-08 with Business & Economics categories.
Many official groups have endorsed the wider use by emerging market borrowers of contract clauses which allow for a qualified majority of bondholders to restructure repayment terms in the event of financial distress. Some have argued that such clauses will be associated with moral hazard and increased borrowing costs. This paper addresses this question empirically using primary and secondary market yields and finds no evidence that the presences of collective action clauses increases yields for either higher- or lower-rated issuers. By implication, the perceived benefits from easier restructuring are at least as large as any costs from increased moral hazard.
Crisis Resolution
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Author : Mr.Ashoka Mody
language : en
Publisher: International Monetary Fund
Release Date : 2003-10-01
Crisis Resolution written by Mr.Ashoka Mody 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 2003-10-01 with Business & Economics categories.
At the April 2003 meeting of the International Monetary and Financial Committees, it was decided to further encourage the contractual approach to smoothing the process of sovereign debt restructuring by encouraging the more widespread use of collective action clauses (CACs) in international bonds. This decision was shaped partly by Mexico's successful launch of a bond subject to New York law but featuring CACs, and by subsequent issues with similar provisions from other emerging market countries. This paper reviews the developments leading up to that event, its implications, and prospects for the future. It asks whether we can expect to see additional issuance by emerging markets of bonds featuring CACs, whether such a trend would in fact help to make the world a safer financial place, and what additional steps might be taken to further enhance modalities for crisis resolution.
Collective Action Clauses Recent Developments And Issues
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Author : International Monetary Fund. Monetary and Capital Markets Department
language : en
Publisher: International Monetary Fund
Release Date : 2003-03-25
Collective Action Clauses Recent Developments And Issues written by International Monetary Fund. Monetary and Capital Markets Department 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 2003-03-25 with Business & Economics categories.
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The Corporation Of Foreign Bondholders
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Author : Mr.Paolo Mauro
language : en
Publisher: International Monetary Fund
Release Date : 2003-05-01
The Corporation Of Foreign Bondholders written by Mr.Paolo Mauro 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 2003-05-01 with Business & Economics categories.
This paper analyzes the Corporation of Foreign Bondholders (CFB), an association of British investors holding bonds issued by foreign governments. The CFB played a key role during the heyday of international bond finance, 1870-1913, and in the aftermath of the defaults of the 1930s. It fostered coordination among creditors, especially in cases of default, arranging successfully for many important debt restructurings, though failing persistently in a few cases. While a revamped creditor association might once again help facilitate creditor coordination, the relative appeal of defection over coordination is greater today than it was in the past. The CFB may have had an easier time than any comparable body would have today.
Too Little Too Late
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Author : Martin Guzman
language : en
Publisher: Columbia University Press
Release Date : 2016-05-10
Too Little Too Late written by Martin Guzman and has been published by Columbia University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-05-10 with Business & Economics categories.
The current approach to resolving sovereign debt crises does not work: sovereign debt restructurings come too late and address too little. Though unresolved debt crises impose enormous costs on societies, many recent restructurings have not been deep enough to provide the conditions for economic recovery (as illustrated by the Greek debt restructuring of 2012). And if the debtor decides not to accept the terms demanded by the creditors, finalizing a restructuring can be slowed by legal challenges (as illustrated by the recent case of Argentina, deemed as "the trial of the century"). A fresh start for distressed debtors is a basic principle of a well-functioning market economy, yet there is no international bankruptcy framework for sovereign debts. While this problem is not new, the United Nations and the global community are now willing to do something about it. Providing guidance for those who intend to take up reform, this book assesses the relative merits of various debt-restructuring proposals, especially in relation to the main deficiencies of the current nonsystem. With contributions by leading academics and practitioners, Too Little, Too Late reflects the overwhelming consensus among specialists on the need to find workable solutions.
The Design And Effectiveness Of Collective Action Clauses
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Author : International Monetary Fund. Legal Dept.
language : en
Publisher: International Monetary Fund
Release Date : 2002-06-06
The Design And Effectiveness Of Collective Action Clauses 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 2002-06-06 with Business & Economics categories.
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