Lawyers and historians alike will find something new in its pages. Protect the value of the assets and the rights of the creditors to avoid litigation. The debt crises in emerging market countries over the past decade have given rise to renewed debate about crisis prevention and resolution. The most complicated debt restructuring in history ft.
Also, this section of the book analyses the adoption of singlelimb cacs in the aftermath of the greek restructuring as well as the proposal for creditor engagement clauses. Restructuring sovereign debt busted flush as argentina ponders its next step, the imf suggests new rules for broke countries finance and economics jun 28th 2014 edition. The maturity extension resulted in an average discount of 12. A debt restructuring plan, where the government agrees with other countries, or unilaterally reduces its debt repayments. Sovereign debt crises involve debt restructurings characterized by a mix of facevalue haircuts and maturity extensions. The opening chapters are dedicated to what the author describes as the theory of sovereign debt. Rodrigo olivarescaminal, alan kornberg, sarah paterson, john douglas, randall guynn, and dalvinder singh. In a new report, the committee on international economic policy and reform examine sovereign debt crises and present procedures for restructuring the debt of bankrupt sovereigns at the. Sovereign debt restructuring and international law 26 oct. Over the past decade, 14 countries have undertaken a total of 18 debt restructurings. By comparison, argentinas 2005 restructuring imposed a 73 percent haircut on sovereign. Debt restructuring, by region of debtor country 302 12.
Sovereign defaults before international courts and tribunals is comprehensible enough to be read by students yet comprehensive enough to provide new insights into public debt restructuring for even experienced scholars. In 1999, it became the first country to default on its brady bonds, which had been created to resolve the latin american debt crisis of the 1980s. There are lots of famous debt crises in history, but the story of iraqs government debt buildup in the 1980s and subsequent restructuring in the early 2000s is probably one of the most. Though they impose enormous costs on societies, these restructurings are often not deep enough to provide the conditions for economic recovery as illustrated by the greek debt restructuring. Restructuring debt in the form of bonds became an issue in the late 1990s in argentina and several other nations, and the imf recently proposed a permanent mechanism to deal with that challenge. Restructuring sovereign debt barry eichengreen barry. Also, this section of the book analyses the adoption of singlelimb cacs in the aftermath of the greek restructuring. Oct 15, 2019 previous discussions included an initiative by the international monetary fund in 2002 to create a sovereign debt restructuring mechanism that was stopped after opposition from the us. This book provides a thorough legal analysis of sovereign indebtedness, examining four typologies of sovereign debt bilateral debt, multilateral debt, syndicated debt, and bonded debt in relation to three crucial contexts.
I use data on 180 sovereign defaults to analyze what determines the recovery rate after a debt restructuring. They present detailed case histories of the default and debt crises in seven. Debt restructuring is a method used by companies to alter the terms of debt agreements in order to achieve some advantage with outstanding debt obligations. With the near certainty of massive sovereign debt restructuring in europe, the three and a half minute transaction speaks to critical issues facing the industry and has broader implications for contract design that will ensure it remains relevant to our understanding of legal practice long after the debt crisis has subsided. Exploring ways to improve the sovereign debt restructuring. First, it draws on the most complete dataset on sovereign debt restructurings available so far, covering the full universe of. Tracing iraqi sovereign debt through defaults and restructuring lse economic history working paper, 2019 working paper. Galbraith, author of welcome to the poisoned chalice.
The list of sovereign debt crises involves the inability of independent countries to meet its. Brief history of sovereign debt resolution and a proposal for a multilateral instrument. Greece has succeeded in pushing through the biggest sovereign debt restructuring in history, with 85. The official sectors search to find a satisfactory method of resolving private sector claims against distressed sovereign borrowers, right down to the imfs proposal in 2002 for a sovereign debt restructuring mechanism sdrjvi, can only be understood in light of this history. In 2012, greece undertook the largest sovereign debt restructuring in history by passing a law providing for a collectively binding restructuring vote taken across most of the countrys locallaw debt stock. Debt restructuring is a process that allows a private or public company or a sovereign entity facing cash flow problems and financial distress to reduce and renegotiate its delinquent debts to improve or restore liquidity so that it can continue its operations replacement of old debt by new debt. Leveraging analysis of historical evidence, the author proposes a theory of creditor structural power and high spillover costs of default, thereby.
Genesis restructuring litigation this book provides a thorough legal analysis of sovereign indebtedness, examining four typologies of sovereign debt. Oct 02, 20 in a new report, the committee on international economic policy and reform examine sovereign debt crises and present procedures for restructuring the debt of bankrupt sovereigns at the euroarea. Best books for financial restructuring wall street oasis. Rieffel writes with authority on the history of developing countries debt crises. We develop a model of endogenous debt restructuring that captures key facts of sovereign debt and restructuring. 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. Biggest debt restructuring in history buys greece only a bit. The list of sovereign debt crises involves the inability of independent countries to meet its liabilities as they become due. Provides insights into some of the more dramatic sovereign debt events in history, and offers lessons for the future management of sovereign debt explores the role that sovereign debt plays in the economy of a nation and how it interacts with societal aspects of a country. The chapter points to the importance of creditor committees for achieving successful sovereign debt restructurings. Martin brooke, rhys mendes, alex pienkowski and eric santor, 20, sovereign default and statecontingent debt, bank of canada joint study with the bank of england skylar brooks is a research associate in cigis global economy program ezra suruma is a senior adviser to the. Debt restructuring provides a legal analysis of international corporate, banking and sovereign debt restructuring from both the creditors and debtors perspective. Sovereign debt wiley online books wiley online library.
This is the first complete dataset of sovereign restructuring cases, covering the six decades from 19502010. This lecture aims at drawing lessons from the recent sovereign debt litigation involving argentina and greece. Genesis restructuring litigation mauro megliani auth. A sovereign default, where a government suspends debt repayments. Concerns surrounding some of these restructurings have led policymakers and capital market participants. We talked about how venezuelas debt restructuring could be the most complicated in history, and what we can learn from argentina and the countrys decadeplus battle with the hedge fund elliott. The authors have written a most valuable book on the sovereign debt crises of the. Sovereign debt restructuring obtain debt sustainability by reducing debt burden in an orderly manner. The prevalence of maturity extensions has been hard to reconcile with economic theory.
A brief history of sovereign debt restructuring in africa. May 09, 2020 argentina on saturday extended its debt restructuring offer until monday, after creditors widely rejected the proposal aimed at avoiding the countrys ninth sovereign debt default. 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. This paper provides a comprehensive survey of pertinent issues on sovereign debt restructurings, based on a newly constructed database. He claims that a more widespread utilization of creditor committees would minimize. Sovereign debt restructurings 19502010 international monetary.
Distressed debt analysis by stephen moyer european debt restructuring. This paper attempts to provide a playbook for the sovereign debt restructuring process, drawing on the experience with sovereign debt restructuring since the 1980s. Debt restructuring is a process that allows a private or public company or a sovereign entity facing cash flow problems and financial distress to reduce and renegotiate its delinquent debts to improve or restore liquidity so that it can continue its operations. Divided into seven comprehensive sections, each preceded by a brief essay on the topic, this volume takes an indepth look at the key themes surrounding sovereign debt. I use data on 180 sovereign defaults to analyze what determines the recovery rate after a debt restructuring process. Distressed debt analysis by stephen moyer european debt restructuring handbook by kon asimacopoulos and justin bickle. Tracing iraqi sovereign debt through defaults and restructuring lse economic history. Recent issues and reforms tapas strickland over the past decade, 14 countries have undertaken a total of 18 debt restructurings. Emta 25th anniversary booklet shortly after the beginning of the latin american debt crisis in 1982, a small secondary trading market for sovereign loans gradually began to develop among commercial banks. It achieved very large debt reliefover 50 percent of 2012 gdpwith minimal financial disruption, using a combination of new legal techniques, exceptionally large cash incentives, and official sector pressure on key creditors. Debt restructuring battle is brewing over venezuela. Aug 19, 2014 this idea has recently been advanced by bank of canada and bank of england staff members in a joint paper.
Detailed case studies of debt defaults by russia, ukraine, pakistan, ecuador, moldova, and uruguay, framed by a comprehensive discussion of the history, economic theory, legal issues, and policy lessons of sovereign debt crises. How iraq pulled off one of the biggest sovereign debt. It provides a practical guide for creditors holding distressed debt, debtor options in a distressed scenario and the necessary steps for the parties to achieve their goals. In the sovereign debt section, there is detailed coverage of the new york litigation on the pari passu litigation and its interpretation in sovereign debt contracts. Exploring ways to improve the sovereign debt restructuring process is a key part of the.
African perspectives on sovereign debt restructuring. Since the early 1980s, there have been a total of 317 sovereign debt restructurings in africa yet african perspectives have not featured prominently in the ongoing sovereign debt debate. African perspectives on sovereign debt restructuring centre. Nov 20, 2017 mr martinez runs a hedge fund called fintech advisory, and has been involved in almost every sovereign debt restructuring in the past quarter century, according to a rare comment piece he wrote.
This chapter will discuss the process of restructuring a sovereign s debt once the decision has been made that this step is inevitable, and the various factors that come into play in determining the scope, strategy, and resolution of the restructuring. Argentina extends deadline for debt restructuring deal. Nov 22, 2014 sovereign debt by mauro megliani, nov 22, 2014, springer edition, hardcover. Requiring assistance from the international monetary fund or.
Argentina on saturday extended its debt restructuring offer until monday, after creditors widely rejected the proposal aimed at avoiding the countrys ninth sovereign debt default. Restructuring sovereign debt busted flush finance and. Rock center restructuring sovereign debt in the 21st. Nov 07, 2016 although international law remains underdeveloped in comparison to domestic law in this area, its general rules and principles are relevant to sovereign debt issues. It covers a wide range of issues, from debt management to debt sustainability, debt reduction policies to sovereign debt restructuring, connecting history to the present, and illuminating actual. The judge, the vultures and creditor rights, 30 world econ. Debt defaults and lessons from a decade of crises the.
Mar 09, 2012 greece has succeeded in pushing through the biggest sovereign debt restructuring in history, with 85. World must combat looming debt meltdown in developing. Six lessons from prior sovereign debt restructurings. New york, 11 september 2015 bhumika muchhala the united nations general assembly adopted a resolution on principles to guide sovereign debt restructuring processes on the afternoon of 10 september. The current approach to resolving sovereign debt crises does not work. This paper outlines the problems impeding timely sovereign debt restructurings, identifies the policy responses proposed and discussed 10 years ago in response to financial crises. The paper adds to the literature in three main ways. The destruction of greece and the future of europe this volume confronts a vital question why do sovereign debt crises persist, despite the vast intellectual and policy effort invested in fighting them. Debt defaults and lessons from a decade of crises the mit press. This book provides a thorough legal analysis of sovereign indebtedness, examining four typologies of sovereign debt bilateral debt, multilateral debt, syndicated debt and bonded debt in relation to three crucial contexts. Sovereign debt genesis restructuring litigation mauro. Biggest debt restructuring in history buys greece only a.
The indispensable guide to the modern history of debt crises. While major money center banks continued to hold loan assets and participated extensively in frequent debt restructurings. The greek debt restructuring of 2012 stands out in the history of sovereign defaults. The book covers a wide range of crises, including banking, balance of payments, and sovereign. Restructuring aims achieve the restructuring over a short time of period to reduce disruptions and reaccess capital markets. The role of the official sector in sovereign debt workouts. After debt restructurings in 1995 and 2000, the country had arguably sustainable levels of external debt.
Sovereign debt is growing internationally at a terrifying rate. This was an example, as the eurozone peripheral sovereign debt crisis is today, of a situation in which the fragile balance sheets of creditor banks drove a debt restructuring. Jun 09, 2017 the stanford rock center hosted a discussion on sovereign debt restructuring with two leading experts in the field. The only book to cover bank, corporate and sovereign restructuring. Sovereign defaults before international courts and tribunals. This was an example, as the eurozone peripheral sovereign debt crisis is today, of a situation in which the fragile balance sheets of creditor banks drove a debt restructuring technique that was in many respects artificial and visibly inadequate to deal with the problem. It provides a practical guide for creditors holding distressed debt. The book also overviews all aspects related to sovereign default in helpful details.
1189 1383 626 1021 1361 656 1250 821 574 351 122 500 1640 119 1106 1032 1397 953 376 368 177 274 1532 125 757 111 156 542 1477 107 1340 482 677 874 445 313 438 33 370 1004 209