Collective indecision
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Collective indecision

Collective action clauses have been inserted into bond documentation for nearly as long as bonds have existed. They're still completely standard in bonds issued under London law, and have never been an issue when those bonds come to be priced.

Even bonds issued under New York law include collective action clauses which allow varying percentages of bondholders to change just about any part of the bond documentation, although the payment terms are always excluded.

But despite the fact that the G7 has been pushing for years for CACs to be introduced into all sovereign bonds, it has never happened. The G7 countries themselves have now announced that they will include CACs in all of their own foreign issuance but still no emerging-market sovereign borrower has taken the plunge with respect to any bond issued under New York law. It seems as though there's something of a disconnect between the senior officers of the major investment banks and the people heading their syndicate desks. While the former have largely embraced CACs at this point, the latter still advise their sovereign clients not to be the first country to attempt the introduction of new, non-standard clauses.