Droit des affaires - Insolvabilité des États et dettes souveraines -1 - 138

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Since then, collective action clauses have become more and more common in new sovereign issues. A privileged witness of sovereign bonds has noted that “collective action clauses in New York bonds for sovereign issuers have become the documentary norm”. 132 Close analysis of market practice has shown that the shares of sovereign bonds issues including CAC’s increased to almost 90 % between 2003 and 2007. 133 One of the major innovations introduced by collective action clauses is the incorporation in bond documentation of a majority restructuring or amendment provision, allowing the sovereign debtor to modify some elements of the bonds by obtaining approval of a qualiﬁed majority. This allows a qualiﬁed majority of bondholders, typically 75%, to amend the bond – for example, the payment terms, extension of maturity, interest-rate cut and possibly a ’haircut’. An individual creditor may hold out and not agree to the change proposed by a sovereign debtor. The amendment will nonetheless be binding on all bondholders, even those who have not accepted the amendment. Hence, the prospect of individual action by dissenting bondholders is made less attractive. By the same token, restructuring a bond issue is made easier because individual creditors have less possibility to block out a restructuring. Another important feature of collective action clauses are majority enforcement provisions. A good example of a clause of this type is a clause requiring a speciﬁc majority, for example 25 % of outstanding bondholders, to vote for acceleration of the bond issue. In the same line, sovereign issuers may also consider including a clause which concentrates the power to initiate litigation against the sovereign debtor with a representative of the bondholders acting upon instruction of say 25 % of the bondholders. Collective action clauses may not be the miracle solution they have been praised to be 134 – especially since it appears that they did not help to reduce
132. L. BUCHHEIT, “Supermajority control wins out”, Intl. Fin. L. Rev., 2007, 26/5, 21. Häseler notes “the almost universal adoption of collection action clauses in new sovereign bond issues beginning in 2003” (S. HÄSELER, Individual Enforcement Rights in International Sovereign Bonds, p. 1). 133. See in particular the study of M. H. BRADLEY, J. D. COX and M. GULATI, “The Market Reaction to Legal Shocks and their Antidotes: Lessons from the Sovereign Debt Market”, (2008). Duke Law School Faculty Scholarship Series - paper 120 (available at http://lsr.nellco.org/duke_fs/ 120/). See also M. GULATI and A. GELPERN, ANNA, "Innovation after the Revolution: Foreign Sovereign Bond Contracts Since 2003" 4 Capital Markets Law Journal 85-103 (2009) – showing that the adoption of collective action clauses in sovereign bonds, while it brought the New York and the London markets for sovereign debt closer, did not lead to the emergence of new boilerplate documentation. No standard has apparently yet emerged from the shift caused by the introduction of collective action clauses. 134. The debate is still open. Consider and compare the views of ANNA GELPERN and MITU GULATI (“Public Symbol in Private Contract: a Case Study”, in Washington University L. Rev., 2006, vol. 84 at 1627 ff – arguing that the introduction of collective action clauses is “unimportant” and merely a “mix of symbolic gesture and political maneuver designed to achieve goals apart from solving the technical problems” linked with sovereign debt restructuring) and F. ELDERSON and M.

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Droit des affaires - Insolvabilité des États et dettes souveraines -1

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