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Count The Limbs: Designing Robust Aggregation Clauses In Sovereign Bonds, Anna Gelpern, Ben Heller, Brad Setser
Count The Limbs: Designing Robust Aggregation Clauses In Sovereign Bonds, Anna Gelpern, Ben Heller, Brad Setser
Georgetown Law Faculty Publications and Other Works
On August 29, 2014, the International Capital Market Association (ICMA) published new recommended terms for sovereign bond contracts governed by English law. One of the new terms would allow a super majority of creditors to approve a debtor’s restructuring proposal in one vote across multiple bond series. The vote could bind all bond holders, even if a series voted unanimously against restructuring, so long as enough holders in the other series voted for it. An apparently technical change, awkwardly named “single-limb aggregated collective action clauses (CACs)” promised to eliminate free-riders for the first time in the history of sovereign bond …