Document Type


Publication Date



sovereign debt, sovereign bonds, Eurozone, Collective Action Clauses, CACs, bond contracts, bailouts, debt restructuring, empirical research


One of the primary policy initiatives instituted in response to the Eurozone sovereign debt crisis is a requirement that all Eurozone sovereign bonds issued after January 1 2013 include provisions referred to as Collective Action Clauses or CACs. These CACs allow for a super-majority of creditors to impose restructuring terms on minority holdouts. This article assesses the likely effect of this proposal on the borrowing costs of sovereign debtors. Contrary to much of the literature, we find that the presence of CACs leads to a lower cost of capital, especially for below-investment grade bonds

Library of Congress Subject Headings

Debt relief, Bonds, Government bonds, Eurozone, Public debts, Bailouts (Government policy)