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On the occasion of the Third International Conference on Financing for Development held in Addis Ababa (13-16 July 2015), UNCTAD will be organizing a high-level side event to talk about vulture funds and their role in sovereign debt workouts. |
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Hedge funds trading in secondary markets with Least Developing Countries’ debt constitute a significant menace for the outcome of debt workouts, particularly in Heavily Indebted Poor Countries.
Indeed, these funds, also called “vulture funds”, typically buy debt at steep discount with the intent of suing the debt for full recovery.
Such litigations are regarded by the international community as threatening debt sustainability in already very poor countries as well as jeopardizing their chances for sustainable development.
The objective of this event is to evidence the proposals that could put a stop to these vulture funds practices in particularly vulnerable economies.
The proposals that will be reviewed explore: domestic avenues (e.g. defanging creditors through strong sovereign immunities across the world, outright exclusion of litigation in respect to vulture activities in jurisdictions hosting financial centers) and international options (e.g. devising public international law reinforcing sovereign immunities or banning uncooperative hedge funds from purchasing HIPCs sovereign debts on secondary markets or making it impossible for creditors to holdout during debt workouts).
International options include proposals to change poor practices through contractual clauses, through international conventions as well as through informal normative approaches.
