On November 28, eurozone finance ministers released details of the so-called European Stability Mechanism (ESM), aimed at curbing the market volatility that was driving peripheral sovereign bond yields higher. Giving some comfort to bondholders is the plan to introduce collective action clauses on all debt issued after 2013, rather than automatic burden sharing, the German Chancellor Angela Merkel had pressed for when she launched the idea the previous month. CACs would enable creditors to pass, by a qualified majority, legally binding decisions to change the terms of payment, which might include a payment stand-still, maturity extensions, interest rate cuts and haircuts.
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