Singer-Proof Bond Contract Inspired by Argentina: Mexico Credit

The odds that Mexico will find itself mired in a legal dispute with creditors over defaulted debt any time soon are low by almost any measure. Still, the country isn’t taking any chances.

This week, Mexico became the first nation to include a provision in bond contracts governed by New York law that would prevent holders with less than 25 percent of the nation’s total debt from blocking a restructuring. The advice came from the International Capital Market Association, which released its recommendations in August, after Argentina’s unwillingness to comply with a U.S. court order requiring it settle with holdout creditors from its default in 2001 led to a second non-payment.