Like bankers who only lend money to people who don't need
it, it is hard to see why bondholders are going to be seduced
by the new breed of flexible CAC-enabled bonds that Mexico sold
last month. An investor is unlikely to buy bonds from a risky
country if they are easier to restructure, and a country that
is unlikely to default would seem to have little to gain from
issuing cacked bonds. Mexico's CAC experiment is likely to be
remembered as a mere curiosity. In February, Mexico sold a $1
billion, 12-year bond. Issued under New York law, the bond
includes collective action clauses (CACs) that for the first
time ever, would require a...
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