Mexico's public offering with New York-style ICMA CACs is a huge deal. But it turns out that Vietnam's exempt offering on November 6, also under New York law, was there first. Since it is not a public offering, the disclosure document is not public, and the one press article describing it is behind a paywall. Here are a few bits that struck me as interesting about the three adoptions so far.
The Clause Formerly Known as Pari Passu:
Like Kazakhstan and Mexico, Vietnam fixes the pari passu clause to exclude the ratable payment interpretation. Funnily enough, the three seem to do it in slightly different ways:
The Notes will at all times rank pari passu without preference among themselves and at least pari passu in right of payment, with all other unsecured External Indebtedness of the Issuer from time to time outstanding, provided, however, that the Issuer shall have no obligation to effect equal or rateable payment(s) at any time with respect to the Notes or any other External Indebtedness and, in particular, shall have no obligation to pay other External Indebtedness at the same time or as a condition of paying sums due on the Notes and vice versa.
The Notes shall at all times rank without any preference among themselves and equally with all other present and future unsecured and unsubordinated External Indebtedness (subject to Condition 11 below [Negative Pledge]) provided, however, consistent with similar provisions in the Government’s other External Indebtedness, that this provision shall not be construed so as to oblige the Government to effect equal or rateable payment(s) at any time with respect to any such other External Indebtedness and, in particular, it shall not be construed so as to oblige the Government to pay other External Indebtedness at the same time or as a condition of paying sums due on the Notes and vice versa.
The debt securities rank and will rank without any preference among themselves and equally with all other unsubordinated public external indebtedness of Mexico. It is understood that this provision shall not be construed so as to require Mexico to make payments under the debt securities ratably with payments being made under any other public external indebtedness.
In substance, all three are the same as the ICMA model. They allow series-by-series, two-tier aggregated, and stock-wide aggregated votes at the option of the issuer--though they are drafted differently. Kazakhstan and Vietnam mostly use the ICMA language. Mexico is in line with its existing New York documentation, more pared down -- but really a matter of style. The voting thresholds are the same: 75% of outstanding for individual series and stock-wide votes, 66 2/3% of each series + 50% of stock for two-tier aggregated votes. In a stock-wide vote, the output must be uniformly applicable (same instrument or same menu for all).
Collective Representation and Majority Enforcement:
Kazakhstan and Vietnam have fiscal agency agreements; Mexico has a trust indenture. All three require a creditor vote of 25% to accelerate. Kazakhstan provides for a noteholder committee if bad things happen; Vietnam and Mexico do not. ICMA has recommended contract clauses on committees since 2004; some issuers in London have taken up the call, but virtually none in New York have. Note that you do not need a contract clause ex ante to form a committee ex post; in contrast, you cannot have majority voting, ranking, or trustees unless your contract provides for them in advance.