Clifford Chance

ICMA consults further on sovereign bonds

16 July 2014

The International Capital Market Association has followed up its consultation paper of December 2013 about collective action and pari passu clauses in sovereign bonds with supplementary questions about how collective action clauses should be structured in order to enable sovereign debt restructuring to take place in an efficient and fair manner. The questions relate mainly to how voting should be managed across multiple series of bonds. For example, is a single vote across all series of bonds being aggregated sufficient, or should there also be individual votes within each series? What series of bonds should be capable of aggregation? How and when should information be given to bondholders? The questions raise important policy issues that are vital to ensure that appropriate forms of sovereign collective action are used in the future and are being discussed at a time when the International Monetary Fund is working on its lending framework and sovereign debt vulnerabilities.

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