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Fine Print on Argentine Bonds Becomes Crucial as Default Looms

  • Bonds issued in 2005, 2010 seen safer from large haircuts
  • Stricter collective action clauses offer additional protection

As Argentina careens toward a default, investors are paying a premium for bonds that they think will give them more negotiating power.

They’re delving deep into legal rules governing the securities, searching for language covering collective action clauses that come into play when borrowers want to change contract terms, as in a restructuring. Notes that require a higher percentage of investors to sign off on any deal often trade at a premium of about 25% over those with a lower threshold.