The Corporation of Foreign Bondholders

IMF Working Papers, May 1, 2003

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This paper analyzes the Corporation of Foreign Bondholders (CFB), an association of British investors holding bonds issued by foreign governments.
The CFB played a key role during the heyday of international bond finance, 1870-1913, and in the aftermath of the defaults of the 1930s.
It fostered coordination among creditors, especially in cases of default, arranging successfully for many important debt restructurings, though failing persistently in a few cases.
While a revamped creditor association might once again help facilitate creditor coordination, the relative appeal of defection over coordination is greater today than it was in the past.
The CFB may have had an easier time than any comparable body would have today.

The CFB fostered coordination among creditors, especially in cases of default.
It arranged successfully for many important debt restructurings, though it failed persistently in a few cases.
The paper suggests that a resurrected Corporation of Foreign Bondholders might help facilitate creditor coordination, but notes the increased relative appeal of defection over coordination in the contemporary context.

Key historical periods highlighted:
- Heyday of international bond finance: 1870-1913.
- Aftermath of the defaults of the 1930s.

Subject: Bonds, Collective action clauses, Emerging and frontier financial markets, Financial institutions, Financial markets, Loans, Sovereign bonds
Keywords: bond finance, Bonds, CFB activity, CFB bondholder, CFB committee, CFB offer, CFB report, CFB service, Collective action clauses, creditor coordination, creditor country authorities, Eastern Europe, Emerging and frontier financial markets, emerging market, Europe, foreign bondholders, Global, government intervention, Loans, negotiating government, resurrected Corporation of Foreign Bondholders, Sovereign bonds, success record, WP