London Coalition on Sustainable Sovereign Debt: One year in review

The London Coalition on Sustainable Sovereign Debt was formally launched in June 2025.

Developed as a time-bound public-private partnership, the Coalition brings together sovereign debt practitioners, investors, lenders, legal and restructuring experts, and public sector institutions to develop practical solutions to persistent challenges in sovereign borrowing and debt restructuring.

This one-year review looks back at the Coalition’s first year of work, including progress on broad debt pause clauses, the launch of the Implementation Guide for Restructuring Private Sector Sovereign Loans, and the Coalition’s role in connecting actors across the international debt architecture.

Progress highlights

The Coalition has created a practical forum for public-private problem-solving.
Many sovereign debt challenges do not sit neatly within one institution, creditor class or market segment. In its first year, the Coalition helped bring together sovereign borrowers, investors, commercial lenders, official sector institutions, rating agencies, legal advisers and restructuring experts to work through practical barriers and develop tools that can be used in real transactions and restructuring processes.

Broad debt pause clauses are moving from concept to market-ready design.
Building on earlier disaster and climate-resilient debt clauses, the London Coalition’s Bondholder Working Group developed a model term sheet for broader pause clauses and enhanced debt transparency. The proposal is designed to give sovereign borrowers temporary liquidity relief after severe shocks, while preserving investor protections and supporting market confidence.

Private sector sovereign loan restructurings need clearer coordination.
Sovereign debt restructurings often focus on bonds, but commercial bank loans and other private sector non-bond claims can be an important part of the creditor landscape. The Coalition’s Implementation Guide for Restructuring Private Sector Sovereign Loans provides a common reference point to support earlier engagement between borrowers, banks and advisers, improve information-sharing and reduce avoidable delays.

Why this matters

External shocks are placing growing pressure on sovereign debt markets. For countries with limited fiscal space, a hurricane, flood, pandemic or other severe disruption can quickly become a liquidity problem, forcing governments to respond to urgent needs while debt service continues on fixed terms.

At the same time, sovereign debt restructurings can be slowed by coordination challenges across different creditor groups, legal structures and instruments. These delays can affect both borrowers and creditors, prolonging uncertainty and constraining access to finance.

The Coalition’s first year shows the value of moving from diagnosis to delivery: developing practical tools, guidance and contractual approaches that can support greater resilience before shocks occur and better coordination when restructurings are needed.

Looking ahead

The Coalition’s next phase will focus on moving the tools developed during its first year into practical use.

For sovereign bonds, the immediate priority is to progress from the model term sheet for broad debt pause clauses and enhanced transparency towards a first pilot transaction. The Coalition will continue engagement with sovereign issuers, investors, debt management offices, rating agencies, debt capital markets desks and other market participants.

For private sector sovereign loans, the focus is on building out a wider toolkit to support earlier engagement and more predictable restructuring processes. This includes loan creditor committee principles, contractual provisions to support faster coordination, and work to improve understanding of export credit agency-backed lending.

Across both areas, progress will be measured not only by the tools produced, but by their uptake and use in real transactions and restructurings.

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