IMF calls for ‘modified pari passu clauses’ in new international sovereign bonds
Executive board supports contractual reforms that would make restructuring ‘more orderly’
The International Monetary Fund's executive board has thrown its support behind a staff proposal to overhaul legal provisions of international sovereign bond contracts that would limit the influence of ‘holdouts' in restructuring proceedings.
The staff paper proposes a modification to government bonds' ‘pari passu clause' – the principle that all creditors be treated equally in the event of restructuring – to "make clear" that issuers are not required to pay creditors "on an equal or ratable
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