What CACs Lack

What CACs Lack

Corporate & Sovereign Strategy

Mexico has issued five bonds this year featuring clauses intended to help coordinate bondholders’ demands in the event of a debt restructuring. Mexico was the first borrower to use these so-called collective action clauses (CACs) when it sold a $1 billion global bond in March led by JP Morgan and Goldman Sachs. At the time, the issue was welcomed with great fanfare for advancing the debate over improving the sovereign debt restructuring process - and for burying an attempt by the International Monetary Fund to create a sovereign debt restructuring mechanism (SDRM), an international bankruptcy court for governments.

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