The Role and Limitations of Contractual Action Clauses in Debt Restructuring

How Did We Get the Crappy CAC? Argentina made a lot of investors mad by proposing (threatening?) to pursue a divide-and-conquer strategy in its ongoing debt restructuring. The proposal added new jargon to the already-bewildering sovereign debt lexicon. Redesignation! Pac-Man! But what did Argentina really do? It all comes down to the collective action clause, or CAC. We talk with the brilliant Anna Gelpern about these clauses, about whether Argentina or its creditors were being ill-behaved, and about how Argentina could have avoided all this drama if it had just used a slightly different CAC, one that is already in widespread use. Basically, Argentina got the crappy CAC. Producer: Leanna Doty