IMF calls for ‘modified pari passu clauses’ in new international sovereign bonds

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IMF cites Argentine litigation

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 bas

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