The International Monetary Fund raised blood pressure, never mind eyebrows, with a suggestion in its December 2011 report on Greece that the government should consider retroactively writing collective action clauses (CACs) into its Greek law sovereign bonds issues. These would enable debt restructuring with the support of a majority of bondholders, without having to battle holdout investors through the courts.
CACs have been included in sovereign issuance by many emerging markets since a $1bn bond launched by Mexico in March 2003. In keeping with the ongoing global role reversal, they have not been included in the paperwork for developed market sovereign bonds, on the basis that the threat of restructuring was irrelevant.
