Reprofiling today for a sustainable tomorrow: A unilateral Italian debt restructuring

Abstract

This article presents a simple and attractive option for restructuring Italy's debt through the unilateral extension of maturities for its domestic government securities, which make up about 98 per cent of Italy's outstanding bonds. Italy's domestic government securities are issued as decrees under the 2003 Consolidated Act. Article 3 of the Act explicitly grants Italy the power to unilaterally extend maturities for all domestic government securities. To exercise this restructuring power, the Ministry of Economy and Finance must issue a framework decree that authorizes the Treasury to unilaterally reprofile Italy's debt. The inclusion of Collective Action Clauses (CACs) in some of Italy's bonds does not foreclose Italy from using its Article 3 unilateral extension power.