ICMA updates clauses for sovereign restructures

Author: Tom Young | Published: 3 Sep 2014

The International Capital Market Association (ICMA) has published updated collective action clauses (CACs) and a new standard pari passu clause for sovereign debt securities.

The changes, released on August 29, are thought to be a response to the acrimonious dispute between holdouts and the Argentinian government, as well as Greece’s restructuring following the financial crisis.

CACs allow a majority of bondholders to agree to changes in bond terms that are legally binding on all holders of the bond, including those voting against the restructuring. That can include extending maturities or reducing the principal.

"The potential...