The Venezuelan Collective Action Clauses

1. Adoption of Collective Action Clauses by Venezuela

Venezuela started including collective action clauses (CACs) in its international bonds issued under New York law in 2003. Currently, Venezuelan international bonds that include CACs represent an aggregate principal amount of approximately U.S.$ 4.17 billion out of a total principal of foreign external indebtedness of approximately U.S.$ 24 billion (excluding foreign external indebtedness of Venezuelan quasi-sovereigns such as Petróleos de Venezuela, S.A.¹). It now seems that CACs have become a standard feature in Venezuela’s international debt securities issued under New York law.

Venezuela joins Mexico, Brazil, Uruguay and other Latin-American sovereigns that had previously included CACs in their global bonds issued under New York law. However, Venezuela and Brazil are the only sovereigns whose CACs require an 85% approval threshold, as opposed to Mexico —and the majority of the other sovereigns that have included CACs— whose