EMTA Special Seminar: Further Improvements in the Market-Based Approach to Sovereign Debt Restructuring (NYC) - Sept. 28
EMTA SPECIAL SEMINAR: FURTHER IMPROVEMENTS IN THE
MARKET-BASED APPROACH TO SOVEREIGN DEBT RESTRUCTURING
Thursday, September 28, 2017
31 West 52nd Street
12:00 Noon Registration and Lunch
12:30 p.m. - 2:15 p.m. Panel Discussion
Benu Schneider (Adjunct Senior
Research Fellow, Research and Information Systems, Formerly UN Staff and
Project Leader, Further Improvements in the Market-Based Approach) – Moderator
Deborah Zandstra (Clifford Chance)
Mark H. Stumpf (Arnold & Porter Kaye Scholer)
Lee Buchheit (Cleary Gottlieb Steen & Hamilton)
Whitney Debevoise (Arnold & Porter Kaye Scholer)
Humes (Greylock Capital)
This Special Seminar is
part of a continuing series of panels and presentations that EMTA is pleased to
sponsor on various topics of interest to Emerging Markets investors and other
market participants, and is part of EMTA’s Legal & Compliance Seminars*.
*CLE credit will be
available for NY attorneys. This seminar
is non-transitional and appropriate for experienced attorneys only. Please click here for details on EMTA’s
Financial Hardship Policy.
In the early 2000’s, the introduction of
collective action clauses (CACs) in international bond contracts was a
significant contract-based development, designed to mitigate holdout risks by
allowing for bondholder majority voting within a series of bonds. In recent times, holdout risks, such as in
the cases of Argentina and Greece, and aggressive use of litigation by holdout
creditors, received renewed attention. Significant
improvements in contractual technology for bonds followed including, (i)
improving CACs to allow aggregation of bondholder voting (across multiple
series of bonds), known as aggregated CACs, to further mitigate holdout risk
and enhance coordination across different series of bond issuances, (ii)
enhanced pari passu provisions to disavow the ratable payment
interpretation of pari passu clauses,
and (iii) in a few cases, use of trust structures (a potential
dampener on holdouts litigation). The
IMF also updated its sovereign lending policies with an increasing focus on
pre-default restructurings, is reviewing its lending in arrears policy (LIA), reviewed
its DSA methodologies, scrapped its systemic exemption for exceptional access
lending and agreed, in certain circumstances, to tolerate official sector
These developments have been important steps
forward in improving sovereign bond contracts and the role of the IMF. To build up on this progress, a technical
study group was set up under the aegis of the FFDO-UNDESA (with participants
from the fields of academia, the legal sector, as well as some representatives
from international institutions, central banks, ministries of finance and the
private sector). The panel will present
some identifiable incremental steps that can be taken to make further
improvements in the market-based approach to sovereign debt restructuring. The main issues covered in the UN Technical
Study Group Report on Sovereign Debt Restructuring: Further Improvements in the
Market-Based Approach (Click Here for the Report) are:
needs to be done to improve information flows and would standardization of bond
and loan contracts improve the architecture for sovereign debt restructuring?
further improvements can be made in provisions and clauses in bonds contracts?
can the progress in bond contracts be followed by improvements in commercial
bank loan contracts? Can holdouts be prevented/reduced through contractual provisions?
advantages does a trust structure have vis-à-vis a fiscal agent in a debt
restructuring? Can trust structures
reduce the likelihood of holdouts?
engagement between a debtor and its creditors have to be pre-agreed
are the issues in setting up a creditor committee for engagement between
debtors and creditors?
contingent debt instruments such as GDP-linked bonds be useful?
should be the considerations in the review of the “good faith” criterion in the
IMF’s LIA policy?
does bank regulation affect sovereign debt restructuring? What are the open issues in regulation
affecting sovereign debt?
Click Here for a
Michael Waibel (University of Cambridge) on Engagement Between Creditors and Sovereign Debtors: Guidance on Setting Up
Registration fee for EMTA Members: US$95
REGISTER FOR THIS EVENT