Beginning January 1, 2013, Euro Area authorities required member countries to include “collective action clauses,” or “CACs,” in sovereign bonds with a maturity over one year. CACs are a voting mechanism by which a bondholder supermajority (e.g., 66.67% or 75%) can restructure bond terms in a vote that binds dissenters. Before 2013, the vast majority of sovereign bonds issued by Euro area countries not only lacked CACs; they essentially said nothing about restructuring. Because of this policy change in 2013, almost every Euro Area sovereign has two sets of bonds outstanding: CAC bonds and no-CAC bonds. Is either type of bond safer for investors to hold in the event of a restructuring. If Italy or another Euro Area country needs to restructure, the difference between CAC and no-CAC bonds will become important. As an initial matter, it is tempting to think that the no-CAC bonds protect investors from restructuring, because these bonds implicitly give each bondholder the right to veto a restructuring of the bond. To be clear, the no-CAC bonds don’t actually say that investors have this right--the bonds say nothing at all--but this isn’t an unreasonable interpretation. But even if so interpreted, it isn’t clear that the no-CAC bonds really offer more protection. The reason is that almost all of the bonds—CAC and no-CAC—are governed by the local law of the issuing sovereign. And the sovereign can change that law to facilitate a restructuring. […]