Sovereign Debt Repurchases: No Cure for Overhang / Jeremy Bulow, Kenneth Rogoff.

Format:

Book

Author/Creator:

Bulow, Jeremy.

Contributor:

National Bureau of Economic Research.

Rogoff, Kenneth.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2850.

NBER working paper series no. w2850

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Sovereign Debt Repurchases

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1989.

Summary:

We show, in a reasonably general model, that if a highly indebted country has good investment projects available to it, then it will not benefit from using any of its resources to buy back debt at market prices. Debt buybacks and debt-equity swaps only make sense for the country if these programs are heavily subsidized by creditors. This result holds for all buyback programs large and small, so long as they involve voluntary creditor participation and are not part of a larger deal including offsetting concessions from lenders. Our analysis therefore casts doubt on the popular argument that unilateral debt repurchases benefit HICs by relieving "debt overhang".

Notes:

Print version record

February 1989.