The call for sovereign default reform is taking a big step.
The International Capital Market Association, an influential group of 400 banks and investors, will call Friday for reforms aimed at preventing repeats of the bitter debt dispute between Argentina and Paul Singer that has spiraled into a new default by the South American country.
The ICMA’s plan would reduce the ability of holdout creditors like Singer to litigate and undermine debt restructurings, in part by using contract clauses to bind all bondholders to debt restructurings in which 75 percent of all holders are in agreement, said Eric LeCompte, of Jubilee USA, a debt relief organization.
Additionally, the plan will argue that the parity clause in existing bond contracts should mean that holdout funds should always receive the same restructured bonds that won support of the majority of investors.
News of the report was first reported by the Financial Times.