Washington, DC - The International Capital Market Association (ICMA), a group of banks and investors, released a new debt framework this morning aimed at reducing the ability of predatory funds and hold-out investors to undermine debt restructurings. The plan was created after meetings convened by the US Treasury Department in the wake of Greece's debt restructuring and comes in the aftermath of the landmark debt case between Argentina and NML Capital.
"The actions of ICMA are impressive," said Eric LeCompte, Executive Director of the religious anti-poverty group, Jubilee USA. "It really shows there is a global consensus to stop this predatory behavior."
The ICMA's plan would use contract clauses to bind all bond-holders to any debt restructuring agreement. Under the plan, the "pari passu" or parity clauses would require would-be hold-outs to accept restructured bonds approved by the majority of creditors. The ICMA plan states that all bondholders must accept a deal approved by 75% or more of a country's creditors, a clause that would have prevented Argentina's hold-outs from litigating for full repayment. The International Monetary Fund is set to propose similar guidelines in late September.