Do Enhanced Collective Action Clauses Affect Sovereign Borrowing Costs? /

This paper analyzes the effects of including collective action clauses (CACs) and enhanced CACs in international (nondomestic law-governed) sovereign bonds on sovereigns' borrowing costs, using secondary-market bond yield spreads. Our findings indicate that inclusion of enhanced CACs, introduce...

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Bibliografski detalji
Glavni autor: Chung, Kay
Daljnji autori: Papaioannou, Michael
Format: Žurnal
Jezik:English
Izdano: Washington, D.C. : International Monetary Fund, 2020.
Serija:IMF Working Papers; Working Paper ; No. 2020/162
Online pristup:Full text available on IMF
Opis
Sažetak:This paper analyzes the effects of including collective action clauses (CACs) and enhanced CACs in international (nondomestic law-governed) sovereign bonds on sovereigns' borrowing costs, using secondary-market bond yield spreads. Our findings indicate that inclusion of enhanced CACs, introduced in August 2014, is associated with lower borrowing costs for both noninvestment-grade and investment-grade issuers. These results suggest that market participants do not associate the use of CACs and enhanced CACs with borrowers' moral hazard, but instead consider their implied benefits of an orderly and efficient debt resolution process in case of restructuring.
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Opis:1 online resource (44 pages)
Format:Mode of access: Internet
ISSN:1018-5941
Pristup:Electronic access restricted to authorized BRAC University faculty, staff and students