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Collective action clauses: how the Argentina litigation changed the sovereign debt markets
Capital Markets Law Journal  (IF),  Pub Date : 2017-04-01, DOI: 10.1093/cmlj/kmx022
Antonia E. Stolper, Sean Dougherty

Following a lengthy process, including two consultations among members and a round table convened by the US Treasury staff in 2013, focused on minimizing the risks of market dislocations such as those associated with Argentina’s prolonged restructuring, the International Capital Markets Association (ICMA) in August 2014 published, and then in May 2015 revised, standard form collective action clauses (CACs). While the provisions contain three options for addressing the problem of holdout creditors in sovereign debt restructurings as described in more detail below, the ‘single limb’ voting option is the most innovative and could be the provision that has the most lasting impact on future sovereign debt restructurings. The theory behind the single-limb option is that it materially raises the cost of becoming a holdout creditor in a sovereign debt restructuring thereby allowing issuers and other investors to better manage sovereign restructurings and providing an increased level of predictability. In addition to endorsement by the International Monetary Fund Key points