Structural shift ahead for sovereign debt to combat holdouts, says Buchheit

Structural shift ahead for sovereign debt to combat holdouts, says Buchheit

Corporate & Sovereign Strategy

Collective action clauses (CACs) in sovereign bonds are set change, to cut the risk of holdout creditors disrupting a restructuring, Cleary Gottlieb partner Lee Buchheit said on Wednesday. CACs minimize the chances that a small group of creditors can avoid a haircut taken by others in a restructuring — they stipulate that if a large majority of bondholders agree to a change the terms of a bond, that change will apply to the whole instrument. Now CACs are set to get even tougher. “[CACs] do not w

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