Individual Enforcement Rights in International Sovereign Bonds
AbstractSovereign bonds are notoriously hard to enforce. What little rights bondholders have can be vested either collectively or individually. It seems that investors, particularly in the US market, traditionally had a preference for the latter, which hindered financial market reform projects, such as the universal adoption of collective action clauses in 2003. This paper uses a range of theoretical approaches to discuss whether it is indeed in the bondholder’s collective interest to be allowed to individually sue and attach the debtor country’s assets following a default. Furthermore, it examines the landmark case of Elliott Associates v. Peru to attempt a quantitative assessment of just how much sovereign bondholders actually value individual enforcement rights. I find that even the single most important event to reinforce creditor rights in recent years had no noticeable impact on bond prices.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 11518.
Date of creation: 10 Nov 2008
Date of revision:
sovereign debt; collective action clauses; fiscal agency agreements; trustees;
Other versions of this item:
- Häseler, Sönke, 2011. "Individual enforcement rights in international sovereign bonds," MPRA Paper 35331, University Library of Munich, Germany.
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-18 (All new papers)
- NEP-LAW-2008-11-18 (Law & Economics)
- NEP-REG-2008-11-18 (Regulation)
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