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Clifford Chance

Clifford Chance


Creditor engagement in sovereign debt restructuring

6 April 2016

The lack of a regime for sovereign insolvency leaves contractual terms as the prime means to facilitate efficient and fair sovereign debt restructuring (including re-profiling), should it prove necessary. The growing use of aggregated collective action clauses in sovereign bonds represents a major step in this direction. Some believe that the next step should be the inclusion in bonds of terms that facilitate open and meaningful discussions between sovereigns and their creditors. The logic is that information sharing and close cooperation between sovereigns and their bondholders are key elements in quick and successful debt restructuring arrangements. The IMF has said that it will consider later this year debtor-creditor engagement during debt restructuring.

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