Europe’s ESM Foresees Bond Clauses, IMF Restructuring Standards

Europe’s planned permanent rescue fund may require clauses in new bond issues that would leave the door open for debt restructurings, while deeming writeoffs “exceptional” and subject to International Monetary Fund standards, according to a draft text.

European Union finance ministers meet Jan. 23 to discuss the draft, which waters down earlier provisions on restructuring after EU-mandated losses for Greek bondholders helped exacerbate the sovereign debt crisis. The treaty, which is not final and could change, still calls for clauses in bond contracts that would prevent small clusters of investors from blocking a restructuring.