MFA led six other financial services trade associations in a joint letter opposing New York’s sovereign debt champerty bill, warning that the legislation would weaken New York’s position as the leading global jurisdiction for sovereign debt issuance and litigation.
The letter made three key points:
- The bill would significantly increase the cost of capital for sovereign borrowers by creating greater legal uncertainty in sovereign debt markets.
- The proposal would incentivize sovereign borrowers to force litigation where the champerty defense could be raised, undermining established creditor rights and restructuring frameworks.
- The legislation could drive sovereign debt issuances and related legal activity to competing jurisdictions, including the U.K., Delaware, and Texas, harming New York’s role as a global financial and legal center.
The coalition also warned that the bill could create broader unintended consequences for New York’s economy by discouraging financial market activity and reducing the state’s competitiveness.
