Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/313446 
Year of Publication: 
2021
Citation: 
[Journal:] Journal of Banking and Financial Economics (JBFE) [ISSN:] 2353-6845 [Issue:] 15 [Year:] 2021 [Pages:] 59-87
Publisher: 
University of Warsaw, Faculty of Management, Warsaw
Abstract: 
This paper analyzes the effects of including collective action clauses (CACs) and enhanced CACs in international (nondomestic law-governed) sovereign bonds on sovereigns' borrowing costs, using secondary-market bond yield spreads. Our findings indicate that inclusion of enhanced CACs, introduced in August 2014, is associated with lower borrowing costs for both noninvestment-grade and investment-grade issuers. These results suggest that market participants do not associate the use of CACs and enhanced CACs with borrowers' moral hazard, but instead consider their implied benefits of an orderly and efficient debt resolution process in case of restructuring.
Subjects: 
collective action clause
sovereign bond contractual clause
governing law
sovereigndebt restructuring
default
bond spreads
sovereign cost of borrowing
JEL: 
E43
F32
F34
G12
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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