Among the policy initiatives announced by European politicians to tackle the current sovereign debt crisis is to require the inclusion of new contract provisions in Eurozone sovereign bonds. These provisions, referred to as Collective Action Clauses or CACs, are aimed at enabling an orderly restructure of financially distressed sovereign debt, thereby obviating the need for Eurozone bailouts. However making restructurings easier and cheaper could potentially increase the propensity of governments to borrow irresponsibly. If so, mandating the inclusion of such clauses might increase borrowing costs, especially for sovereigns in the weakest financial condition. By examining the historical relation between CACs and yields on bonds written under U.S. and English law, we attempt to shed light on what would be the effect of mandating that CACs be included in all Eurozone bonds. Our general finding is that, contrary to previous research and common belief, CACs are associated with lower rates for sovereigns that are in the weakest financial condition. We provide a possible explanation for this seemingly counter intuitive result.