The Argentine Collective Action Clause Controversy (La Controversia Argentina sobre las Cláusulas de Acción Colectiva)

Abstract

English Abstract: Argentina is once again seeking to restructure its external debt. To facilitate this process, the country is proposing to use the state-of-the-art collective action clause that was included in the bonds Argentina started issuing in the Spring of 2016. When it uncloaked its restructuring offer to creditors in April of this year, however, Argentina sought the consent of bondholders to amend those clauses in ways that have sparked an outcry from certain of those holders. At stake in this controversy is the question of which version of a collective action clause will be incorporated in future bonds issued by sovereign borrowers.

Spanish Abstract: Las cláusulas de acción colectiva (“CACs”) son disposiciones contractuales que permiten a una mayoría o a una mayoría calificada de tenedores de un instrumento de deuda con múltiples acreedores, tales como un bono, tomar decisiones que obliguen a todos los tenedores de ese mismo instrumento. Aclamadas como una técnica innovadora para facilitar la reestructuración de deuda soberana en este siglo, las CACs se han convertido en el objeto de una amarga disputa en la propuesta de reestructuración de la deuda en bonos de la República Argentina este año 2020.

Note: Downloadable document is in English and Spanish.

Keywords: sovereign debt, Argentina, Pac-Man, redesignation, collective action clause

JEL Classification: G15, F34, K12, K33