## Third Progress Report on Inclusion of Enhanced Contractual Provisions in International Sovereign Bond Contracts

## Source details

**Canonical URL:** [Third Progress Report on Inclusion of Enhanced Contractual Provisions in International Sovereign Bond Contracts](https://www.imf.org/en/publications/policy-papers/issues/2017/12/15/pp113017third-progress-report-on-cacs)

## Other formats

- [Markdown version](/en/publications/policy-papers/issues/2017/12/15/pp113017third-progress-report-on-cacs/index.md)
- [Structured JSON version](/en/publications/policy-papers/issues/2017/12/15/pp113017third-progress-report-on-cacs/index.json)
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## Bibliographic details
- Published: December 15, 2017

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### Executive endorsement and endorsed contractual features
- In October 2014 the IMF Executive Board endorsed inclusion of key features of enhanced pari passu provisions and collective action clauses (CACs) in new international sovereign bonds.
- The Executive Board endorsement specifies:
  - (i) a modified pari passu provision that explicitly excludes the obligation to effect ratable payments, and
  - (ii) an enhanced CAC with a menu of voting procedures, including a “single-limb” aggregated voting procedure that enables bonds to be restructured on the basis of a single vote across all affected instruments, a two-limb aggregated voting procedure, and a series-by-series voting procedure.
- Directors supported an active role for the IMF in promoting inclusion of these clauses.
- The IMFC and the G20 called on the IMF to promote the use of such clauses and report on their inclusion.

### Progress since endorsement and market impact
- Since the Executive Board’s endorsement, the IMF has published periodic progress reports on inclusion of the enhanced clauses.
- Key findings from these reports:
  - Approximately 85 percent of new international sovereign bond issuances since October 2014 (in nominal principal amount) included the enhanced clauses.
  - There was no observable market impact on inclusion of the enhanced clauses.
  - The outstanding stock without the enhanced clauses remained significant, and issuers showed little appetite for liability management exercises to accelerate turnover.

### Update as of September 30, 2017 — inclusion and outstanding stock
- This paper provides an update on inclusion of the enhanced clauses and on the outstanding stock of international sovereign bonds as of September 30, 2017.
- Findings reported in Section II:
  - The vast majority of issuers are including the enhanced clauses, with only a few countries standing out against the market trend.
  - While the percentage of the outstanding stock with the enhanced clauses is increasing, a significant percentage of the stock still does not include them.
  - Little action has been taken by issuers to increase the rate of turnover of the outstanding stock without the enhanced clauses.

### Bond structures and outreach efforts
- Section III briefly reports on the use of different bond structures (as described in the paper).
- Section IV describes IMF staff’s ongoing outreach efforts and next steps to promote inclusion of the enhanced clauses.

*Third Progress Report on Inclusion of Enhanced Contractual Provisions in International Sovereign Bond Contracts, December 15, 2017.*

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## Content in this bundle

- **Policy Paper**
  - [Policy Paper (Markdown version)](/-/media/files/publications/pp/2017/pp113017third-progress-report-on-cacs.pdf.md){rel="alternate" type="text/markdown"}
  - [Policy Paper (PDF)](/-/media/files/publications/pp/2017/pp113017third-progress-report-on-cacs.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/policy-papers/issues/2017/12/15/pp113017third-progress-report-on-cacs_