Sovereign Bond Restructuring: Commitment vs. Flexibility

Jason Roderick Donaldson, Lukas Kremens and Giorgia Piacentino

No 29872, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Sovereigns in distress often engage in debt restructuring, typically negotiating with multiple classes of bondholders at once. We use natural experiments to investigate whether sovereign bondholders benefit from committing not to restructure. We find that committing not to restructure one class of bonds is valuable for not only that class, but, in contrast to received theory, for others too. We develop a model to rationalize these cross-bond spillovers. It points to a system of cross-bond equations that, we show, can be exploited to quantify natural experiments and to estimate unobservable elasticities in terms of a few sufficient statistics.

JEL-codes: G34 H63 K12 (search for similar items in EconPapers)
Date: 2022-03
New Economics Papers: this item is included in nep-fmk
Note: CF IFM LE POL
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w29872.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:29872

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w29872

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().