It could make it impossible for debtors to win round enough investors to meet the required threshold in new bonds that include collective action clauses.
FORBES: Billionaire's Hedge Fund Rebuffs NY Fed In Argentina Case: No Risk To $2.6T Payments System
Greece confirmed that it had achieved an 85.8% participation rate on its debt exchange, which would allow the government to activate collective action clauses (CACs) to force holdout bondholders to accept the deal (taking the participation rate north of 95.6%).
FORBES: Greek Default Provides Temporary Relief As EU Crisis Marches On
Yet collective-action clauses will not make much difference to the way debt defaults are actually handled.
Meanwhile, some private-sector groups are working on their own sets of (weak) collective-action clauses.
IMF's proposal was shelved indefinitely at the Fund's spring meetings, and collective-action clauses have sprung to life.
On the investors' side, the belief that they might balk at collective-action clauses seems to have been unfounded.
The issue arises because Greece used so-called collective-action clauses to force a debt exchange on the vast bulk of its bondholders.
It hoped that by starting the ball rolling it would brand collective-action clauses as a sign of a good credit, rather than of weakness.
In perhaps the most important test of Mr Taylor's ideas, Uruguay is offering to swap much of its debt for new bonds containing collective-action clauses.
G10 group of rich countries has come up with model collective-action clauses that are, in many ways, weaker than those that already exist under English law.
In April, John Taylor, top international man in the Treasury, proposed a souped-up version of the collective-action clauses that are common in bonds issued under English law.
应用推荐