Bond restructuring and moral hazard
Subtitle: are collective actions clauses costly?
By: Torbjörn Becker, Anthony Richards, and Yungyong [i.e. Yunyong] Thaicharoen.
Contributors: Richards, Anthony J. 1962-; Thaicharoen, Yunyong.; International Monetary Fund. Research Dept.
Series: IMF working paper -- WP/01/92
Publisher: Intenational Monetary Fund
Published: 2001
Place of publication: Washington, D.C
Language: eng
Number of pages: 41
Subjects: Bond market.; Bonds.; Payment.; Contracts.
Description: Many official groups have endorsed the wider use by emerging market borrowers of contract clauses which allow for a qualified majority of bondholders to restructure repayment terms in the event of financial distress. Some have argued that such clauses will be associated with moral hazard and increased borrowing costs. This paper addresses this question empirically using primary and secondary market yields and finds no evidence that the presences of collective action clauses increases yields for either higher- or lower-rated issuers. By implication, the perceived benefits from easier restructuring are at least as large as any costs from increased moral hazard.
Notes: "July 2001."

Includes bibliographical references.