A new breed of sovereign bonds to combat the
perceived rise in power of holdouts in sovereign restructurings
is growing in popularity. Following on from the collective
action clauses (CAC) drafted by International Capital Markets
Association (ICMA) last year, more
expansive clauses providing sovereigns more leeway for
restructuring are being taken up.
Argentina’s hostile battle to
restructure its sovereign bonds has caused a growing number of
countries looking to pre-empt problems with holdout
The new breed of bonds include CACs that allow all classes of bonds to be
restructured pending a vote by the aggregate note holders. In
November Mexico, extended the restructuring power of
sovereign issuers by including a clause to repay all
restructured notes the same, regardless of their maturity.
"This new provision that Mexico introduced...