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| Type | Working Paper |
| Scope | Discipline-based scholarship |
| Title | The Price of Law: The Case of the Eurozone Collective Action Clauses |
| Organization Unit | |
| Authors |
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| Institution | University of Zurich |
| Series Name | Duke Law School Public Law & Legal Theory Series |
| Number | 2020-73 |
| Date | 2020 |
| Abstract Text | We analyze the price effect of the introduction of Collective Action Clauses (CACs) in all newly issued sovereign bonds of Eurozone countries as of January 1, 2013. By allowing a majority of creditors to modify payment obligations, such clauses reduce the likelihood of holdouts while facilitating strategic default by the sovereign. We find that CAC bonds trade in the secondary market at lower yields than otherwise similar no-CAC bonds. The yield differential widens in countries with worse ratings and in those with stronger legal systems. The results suggest that CACs are seen as pro- rather than anti-creditor provisions. |
| Free access at | Official URL |
| Official URL | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2817041 |
| Other Identification Number | merlin-id:19846 |
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