The Seniority Structure of Sovereign Debt

Christoph Trebesch, Matthias Schlegl and Mark Wright

No 13692, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Sovereign governments owe debt to many foreign creditors and can choose which creditors to favor when making payments. This paper documents the de facto seniority structure of sovereign debt using new data on defaults (missed payments or arrears) and creditor losses in debt restructuring (haircuts). We overturn conventional wisdom by showing that official bilateral (government-to-government) debt is junior, or at least not senior, to private sovereign debt such as bank loans and bonds. Private creditors are typically paid first and lose less than bilateral official creditors. We confirm that multilateral institutions like the IMF and World Bank are senior creditors.

Keywords: Sovereign default; Arrears; Insolvency; Priority; IMF; Official debt; Sovereign bonds; International financial architecture; Pecking order (search for similar items in EconPapers)
JEL-codes: F3 F4 F5 G1 (search for similar items in EconPapers)
Date: 2019-04
New Economics Papers: this item is included in nep-opm
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Citations: View citations in EconPapers (37)

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Related works:
Working Paper: The seniority structure of sovereign debt (2019)
Working Paper: The Seniority Structure of Sovereign Debt (2019)
Working Paper: The Seniority Structure of Sovereign Debt (2019)
Working Paper: The seniority structure of sovereign debt (2019)
Working Paper: The Seniority Structure of Sovereign Debt (2018)
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