The Market Reaction to Legal Shocks and their Antidotes :Lessons from the Sovereign Debt Market
This Article examines the market reaction to a series of legal events concerning thejudicial interpretation of the pari passu clause in sovereign debt instruments.1 Moregenerally, the Article provides insights into the reactions of investors (predominantlyfinancial institutions), issuers (sovereigns), and those who draft bond covenants(lawyers), to unanticipated changes in the judicial interpretation of certain...