Strengthening the Contractual Framework for Sovereign Debt Restructuring - The IMF's Perspective

Capital Markets Law Journal, Volume 11, Issue 1, 1 January 2016, Pages 25–37

14 Pages Posted: 5 Feb 2016 Last revised: 17 Jun 2018

See all articles by Chanda DeLong

Chanda DeLong

International Monetary Fund

Nikita Aggarwal

University of Oxford - Oxford Internet Institute; University of Oxford - Faculty of Law

Date Written: January 1, 2016

Abstract

This article discusses the impetus for, key features of, and recent experience in implementing reforms to international sovereign debt contracts. Recognizing the vulnerabilities in the existing contractual framework for sovereign debt restructuring, the IMF in 2014 endorsed reforms to collective action and pari passu clauses in international sovereign bonds designed to limit the scope for holdout creditors to undermine a restructuring. Progress in incorporating the enhanced clauses in international sovereign bonds has been rapid – with the majority of issuances now including these clauses. However, a substantial stock of outstanding bonds remains without these provisions. The IMF will continue to engage actively with its membership and the markets to further promote the inclusion of the enhanced clauses in new issuances and, where feasible, accelerate the turnover of legacy bonds.

Keywords: Sovereign Debt, Restructuring, International Finance, IMF, Global Financial Crisis

JEL Classification: F3, G15, K33

Suggested Citation

DeLong, Chanda and Aggarwal, Nikita, Strengthening the Contractual Framework for Sovereign Debt Restructuring - The IMF's Perspective (January 1, 2016). Capital Markets Law Journal, Volume 11, Issue 1, 1 January 2016, Pages 25–37. Available at SSRN: https://ssrn.com/abstract=2727309 or http://dx.doi.org/10.2139/ssrn.2727309

Chanda DeLong

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Nikita Aggarwal (Contact Author)

University of Oxford - Oxford Internet Institute ( email )

1 St. Giles
University of Oxford
Oxford OX1 3PG Oxfordshire, Oxfordshire OX1 3JS
United Kingdom

University of Oxford - Faculty of Law ( email )

St Cross Building
St Cross Rd
Oxford, OX1 3UL
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
128
Abstract Views
852
rank
227,309
PlumX Metrics