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Brady Bond Veteran Says Coupon Opt-Outs Vital to Ease EM Pain

  • Carl Ross looks to toggle notes and Cocos for inspiration
  • Sovereign credit expert proposes a way to help distressed EMs

A veteran of 1980s and 1990s emerging-market crises is proposing a bond structure that could give developing nations more fiscal breathing room to cope with their debt burden.

Emerging-market sovereigns in distress should look to a combination of so-called toggle notes and contingent convertible debt, or Cocos, that allow coupon payments to be deferred, according to Carl Ross, partner and sovereign credit analyst at Grantham, Mayo, Van Otterloo & Co.