Collective Action Clauses in UK Debt

The UK Government US$3 bn 2.25% notes maturing in 2008 and Bank of England Euro Notes maturing in 2007 include collective action clauses which reflect the recommendations of the G10 Working Group on Contractual Clauses. While previous HMG foreign currency issues and Bank of England Euro Notes already included collective action clauses (CACs), the UK authorities have chosen to update the CACs included in their foreign currency debt to reflect recent international initiatives in this area. The inclusion of CACs in international bond issues can help strengthen the international financial system by facilitating debtor-creditor negotiation in cases where sovereign debt restructuring is necessary. While there is no intention to restructure any UK debt, the UK authorities have included these CACs as part of their commitment to promoting wider adoption of appropriate contractual clauses.

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