Sensible debt buybacks for highly indebted countries
Detragiache, Enrica
Sensible debt buybacks for highly indebted countries - World Bank Washington, D.C. March 1991 - 32 p. - Working paper series n. 621 .
Copias: F 20705
Incluye bibliografía
Copias: F 20705 1. Introduction -- 2. The model -- 3. Reserve accumulation -- 4. Investment in physical capital -- 5. Negotiated debt buybacks -- 6. More on the lender side of the market -- 7. Conclusions -- References.
Previous studies indicate that debt buybacks at market prices benefit lenders the most because the lack of a seniority structure in sovereign lending distorts secondary market prices upward. The author examines whether welfare-improving buybacks would arise at the " fair " price. If so, policy intervention is needed to remove the distortion. In a model of intertemporal consumption smoothing, buybacks at the fair price are desirable if the country experiences unusually heavy export earnings and if large reserve holdings tend to increase transfers to creditors in default states. Concerted agreements in which debt repurchases are linked to cuts in interest rates or new money requirements can make buybacks at the fair price viable, while preventing the free-rider problem among lenders.
DEUDA EXTERNA
MODELOS ECONOMICOS
GESTION DE LA DEUDA
BANCO MUNDIAL
F 336.3435 D 16082
Sensible debt buybacks for highly indebted countries - World Bank Washington, D.C. March 1991 - 32 p. - Working paper series n. 621 .
Copias: F 20705
Incluye bibliografía
Copias: F 20705 1. Introduction -- 2. The model -- 3. Reserve accumulation -- 4. Investment in physical capital -- 5. Negotiated debt buybacks -- 6. More on the lender side of the market -- 7. Conclusions -- References.
Previous studies indicate that debt buybacks at market prices benefit lenders the most because the lack of a seniority structure in sovereign lending distorts secondary market prices upward. The author examines whether welfare-improving buybacks would arise at the " fair " price. If so, policy intervention is needed to remove the distortion. In a model of intertemporal consumption smoothing, buybacks at the fair price are desirable if the country experiences unusually heavy export earnings and if large reserve holdings tend to increase transfers to creditors in default states. Concerted agreements in which debt repurchases are linked to cuts in interest rates or new money requirements can make buybacks at the fair price viable, while preventing the free-rider problem among lenders.
DEUDA EXTERNA
MODELOS ECONOMICOS
GESTION DE LA DEUDA
BANCO MUNDIAL
F 336.3435 D 16082