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Do Collective Action Clauses Influence Bond Yields? New Evidence from Emerging Markets

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  • Anthony Richards
  • Mark Gugiatti

Abstract

This paper provides empirical evidence relevant to the debate over the desirability of reforms to the way that financial markets and the international community deal with sovereign debt crises. We present new evidence showing that the use of collective action clauses (CACs) in sovereign emerging markets issuance has been wider than previously believed. In addition, we provide results on the way that financial markets have priced the use or non‐use of CACs, both before and after the path‐breaking issue by Mexico in February 2003. We interpret recent developments as indicating that US investors now accept that the use of well‐designed CACs is not inconsistent with protection of creditor rights.

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  • Anthony Richards & Mark Gugiatti, 2003. "Do Collective Action Clauses Influence Bond Yields? New Evidence from Emerging Markets," International Finance, Wiley Blackwell, vol. 6(3), pages 415-447, November.
    • Handle: RePEc:bla:intfin:v:6:y:2003:i:3:p:415-447
    DOI: 10.1111/j.1367-0271.2003.00124.x
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    5. Eichengreen, Barry & Mody, Ashoka, 2000. "Would Collective Action Clauses Raise Borrowing Costs? An Update and Additional Results," Center for International and Development Economics Research, Working Paper Series qt46p4z4c4, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
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    More about this item

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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