Professor Rodrigo Olivares-Caminal speaks to Reuters about the proposed changes to laws in New York State.
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Investors in emerging market sovereign bonds, alarmed by efforts to limit their debt restructuring options, are adding clauses to bond deals that would allow them to switch jurisdictions to avoid such curbs.
Under the proposed changes to laws in New York state, which is the location for roughly half of all international bond deals, commercial creditors could see their recoveries capped at the level of bilateral official lenders.
The rationale is that it would streamline the default process and spare the indebted nations lengthy and costly negotiations. But Professor Rodrigo Olivares-Caminal, Chair in Banking and Finance Law at Queen Mary University of London, is arguing that the proposed changes might not be equitable.
He says: "You will be imposing (the same) haircut when you have two different lenders with two complete different reasons for lending. You are lending millions, and you have a fiduciary duty towards your investors."
Read the full article in Reuters.