AT THE END of February, Mexico, the most important bond issuer in Latin America, stunned the market with a new $1 billion bond that included collective action clauses (CACs). At a stroke, the sovereign had answered the most pressing question facing the emerging-market debt asset class: could it create a mechanism for sovereign workouts or not?
The bond was oversubscribed and Mexico made it clear that from now on CACs will appear in every bond it issues.
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