By James Langton
(April 13 – 17:35 ET) – The federal government is going to adopt collective action clauses in its future foreign currency bond and note issues, a measure designed to help avert international financial crises, says the Finance Department.
Collective action clauses are designed to facilitate debt restructuring by giving issuers and bondholders a framework for restructuring and by preventing small creditors from blocking restructurings, or forcing accelerated payments.
“By bringing in collective action clauses, Canada is helping to lead the process of having collective action clauses adopted by all countries,” says Finance Minister Paul Martin in a press release. “These clauses are an important part of Canada’s effort to promote international financial stability and reduce the risk and severity of global financial crises.”
Martin as chairman of the G-20 is encouraging all member countries to look at similar collective action clauses for their own foreign currency bond issues.
-IE Staff