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...
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