Beneficial Delays In Debt Restructuring Negotiations
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Beneficial Delays In Debt Restructuring Negotiations
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Author : Ran Bi
language : en
Publisher: International Monetary Fund
Release Date : 2008
Beneficial Delays In Debt Restructuring Negotiations written by Ran Bi and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Business & Economics categories.
Delays in debt restructuring negotiations are widely regarded as inefficient. This paper argues that delays can allow the economy to recover from a crisis, make more resources available for debt settlement, and enable the negotiating parties to enjoy a larger "cake". Within this context, therefore, delays may be "beneficial". This paper explores this idea by constructing a dynamic model of sovereign default in which debt renegotiation is modeled as a stochastic bargaining game based on Merlo and Wilson's (1995) framework. Quantitative analysis shows that this model can generate an average delay length comparable to that experienced by Argentina in its most recent debt restructuring.
Holdouts In Sovereign Debt Restructuring
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Author : Rohan Pitchford
language : en
Publisher:
Release Date : 2010
Holdouts In Sovereign Debt Restructuring written by Rohan Pitchford and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with Economics categories.
Abstract: Why is it difficult to restructure sovereign debt in a timely manner? In this paper we present a theory of the sovereign debt restructuring process in which delay arises as individual creditors hold-up a set- tlement in order to extract greater payments from the sovereign. We then use the theory to analyze recent policy proposals aimed at ensuring equal repayment of creditor claims. Strikingly, we show that such collective action policies may increase delay by encouraging free-riding on negotiation costs, even while preventing hold-up and reducing total negotiation costs. A calibrated version of the model can account for observed delays, and finds that free riding is quantitatively relevant: whereas in sim- ple low-cost debt restructuring operations collective mechanisms will reduce delay by more than 60%, in high-cost complicated restructurings the adoption of such mechanisms results in a doubling of delay
Too Little Too Late
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Author : Martin Guzman
language : en
Publisher: Columbia University Press
Release Date : 2016-05-10
Too Little Too Late written by Martin Guzman and has been published by Columbia University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-05-10 with Business & Economics categories.
The current approach to resolving sovereign debt crises does not work: sovereign debt restructurings come too late and address too little. Though unresolved debt crises impose enormous costs on societies, many recent restructurings have not been deep enough to provide the conditions for economic recovery (as illustrated by the Greek debt restructuring of 2012). And if the debtor decides not to accept the terms demanded by the creditors, finalizing a restructuring can be slowed by legal challenges (as illustrated by the recent case of Argentina, deemed as "the trial of the century"). A fresh start for distressed debtors is a basic principle of a well-functioning market economy, yet there is no international bankruptcy framework for sovereign debts. While this problem is not new, the United Nations and the global community are now willing to do something about it. Providing guidance for those who intend to take up reform, this book assesses the relative merits of various debt-restructuring proposals, especially in relation to the main deficiencies of the current nonsystem. With contributions by leading academics and practitioners, Too Little, Too Late reflects the overwhelming consensus among specialists on the need to find workable solutions.
Sovereign Debt Restructurings 1950 2010
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Author : Mr.Udaibir S. Das
language : en
Publisher: International Monetary Fund
Release Date : 2012-08-01
Sovereign Debt Restructurings 1950 2010 written by Mr.Udaibir S. Das and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-08-01 with Business & Economics categories.
This paper provides a comprehensive survey of pertinent issues on sovereign debt restructurings, based on a newly constructed database. This is the first complete dataset of sovereign restructuring cases, covering the six decades from 1950–2010; it includes 186 debt exchanges with foreign banks and bondholders, and 447 bilateral debt agreements with the Paris Club. We present new stylized facts on the outcome and process of debt restructurings, including on the size of haircuts, creditor participation, and legal aspects. In addition, the paper summarizes the relevant empirical literature, analyzes recent restructuring episodes, and discusses ongoing debates on crisis resolution mechanisms, credit default swaps, and the role of collective action clauses.
Sovereign Debt Restructuring And Growth
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Author : Lorenzo Forni
language : en
Publisher: International Monetary Fund
Release Date : 2016-07-22
Sovereign Debt Restructuring And Growth written by Lorenzo Forni and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-07-22 with Business & Economics categories.
This paper studies the effect of sovereign debt restructurings with external private creditors on growth during the period 1970-2010. We find that there are bad and good (or not so bad) debt restructurings for growth. While growth generally declines in the aftermath of a sovereign debt restructuring, agreements that allow countries to exit a default spell (final restructurings) are associated with improving growth. The impact can be significant. In general, three years after restructuring, growth is about 5 percent lower compared to countries that did not face restructuring over the same period. The exception is for final restructurings, which result in positive growth in the years immediately after the restructuring. Final restructurings tend to be better for growth because they reduce countries’ debt, with the strongest effect for countries that exit restructurings with relatively low debt levels.
Costs Of Sovereign Defaults Restructuring Strategies Bank Distress And The Capital Inflow Credit Channel
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Author : Mr.Tamon Asonuma
language : en
Publisher: International Monetary Fund
Release Date : 2019-03-25
Costs Of Sovereign Defaults Restructuring Strategies Bank Distress And The Capital Inflow Credit Channel written by Mr.Tamon Asonuma and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-03-25 with Business & Economics categories.
Sovereign debt restructurings are associated with declines in GDP, investment, bank credit, and capital flows. The transmission channels and associated output and banking sector costs depend on whether the restructuring takes place preemptively, without missing payments to creditors, or whether it takes place after a default has occurred. Post-default restructurings are associated with larger declines in bank credit, an increase in lending interest rates, and a higher likelihood of triggering a banking crisis than pre-emptive restructurings. Our local projection estimates show large declines in GDP, investment, and credit amplified by severe sudden stops and transmitted through a “capital inflow-credit channel”.
Serial Sovereign Defaults And Debt Restructurings
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Author : Mr.Tamon Asonuma
language : en
Publisher: International Monetary Fund
Release Date : 2016-03-21
Serial Sovereign Defaults And Debt Restructurings written by Mr.Tamon Asonuma and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-03-21 with Business & Economics categories.
Emerging countries that have defaulted on their debt repayment obligations in the past are more likely to default again in the future than are non-defaulters even with the same external debt-to-GDP ratio. These countries actually have repeated defaults or restructurings in short periods. This paper explains these stylized facts within a dynamic stochastic general equilibrium framework by explicitly modeling renegotiations between a defaulting country and its creditors. The quantitative analysis of the model reveals that the equilibrium probability of default for a given debt-to-GDP level is weakly increasing with the number of past defaults. The model also accords with an additional fact: lower recovery rates (high NPV haircuts) are associated with increases in spreads at renegotiation.
Sovereign Debt And The Financial Crisis
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Author : Carlos A. Primo Braga
language : en
Publisher: World Bank Publications
Release Date : 2010-11-16
Sovereign Debt And The Financial Crisis written by Carlos A. Primo Braga and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-11-16 with Business & Economics categories.
The book presents and discusses policy-relevant research on the current debt challenges which developing, emerging market and developed countries face. Its value added lies in the integrated approach of drawing on theoretical research and evidence from practitioners' experience in developing and emerging market countries.
The Economics Of Sovereign Debt And Default
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Author : Mark Aguiar
language : en
Publisher: Princeton University Press
Release Date : 2023-09-26
The Economics Of Sovereign Debt And Default written by Mark Aguiar and has been published by Princeton University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023-09-26 with Business & Economics categories.
An integrated approach to the economics of sovereign default Fiscal crises and sovereign default repeatedly threaten the stability and growth of economies around the world. Mark Aguiar and Manuel Amador provide a unified and tractable theoretical framework that elucidates the key economics behind sovereign debt markets, shedding light on the frictions and inefficiencies that prevent the smooth functioning of these markets, and proposing sensible approaches to sovereign debt management. The Economics of Sovereign Debt and Default looks at the core friction unique to sovereign debt—the lack of strong legal enforcement—and goes on to examine additional frictions such as deadweight costs of default, vulnerability to runs, the incentive to “dilute” existing creditors, and sovereign debt’s distortion of investment and growth. The book uses the tractable framework to isolate how each additional friction affects the equilibrium outcome, and illustrates its counterpart using state-of-the-art computational modeling. The novel approach presented here contrasts the outcome of a constrained efficient allocation—one chosen to maximize the joint surplus of creditors and government—with the competitive equilibrium outcome. This allows for a clear analysis of the extent to which equilibrium prices efficiently guide the government’s debt and default decisions, and of what drives divergences with the efficient outcome. Providing an integrated approach to sovereign debt and default, this incisive and authoritative book is an ideal resource for researchers and graduate students interested in this important topic.
The Problem That Wasn T
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Author : Ran Bi
language : en
Publisher: International Monetary Fund
Release Date : 2011-11-01
The Problem That Wasn T written by Ran Bi and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-11-01 with Business & Economics categories.
Contrary to widespread expectation, debt renegotiations in the era of bond finance have generally been quick and involved little litigation. We present a model that rationalizes the initial fears and offers interpretations for why they did not materialize. When the exchange offer is sufficiently attractive vis-à-vis holding out, full participation can be an equilibrium. Legal innovations such as minimum participation thresholds and defensive exit consents helped coordinate creditors and avoid litigation. Unlike CACs, exit consents can be exploited to force high haircuts on creditors, but the ability of creditors to coordinate to block exit consents can limit overly aggressive use.