A journey in the history of sovereign defaults on domestic-law public debt

Aitor Erce, Enrico Mallucci and Mattia Osvaldo Picarelli

Working Papers from European Stability Mechanism

Abstract: We introduce a novel database on sovereign defaults that involve public debt instruments governed by domestic law. By systematically reviewing a large number of sources, we identify 134 default and restructuring events of domestic debt instruments, in 52 countries from 1980 to 2018. Domestic-law defaults are a global phenomenon. Over time, they have become larger and more frequent than foreign-law defaults. Domestic-law debt restructurings proceed faster than foreign ones, often through extensions of maturities and amendments to the coupon structure. While face value reductions are rare, net-present-value losses for creditors are still large. Unilateral amendments and post-default restructuring are the norm but negotiated pre-default restructurings are becoming increasingly frequent. We also document that domestic-law defaults typically involve debt denominated in local currency and held by resident investors. We complement our analysis with a collection “sovereign histories", which provide the fine details about each episode.

Keywords: Public debt; sovereign default; domestic law; database (search for similar items in EconPapers)
JEL-codes: E62 E65 F34 G01 H12 H63 K00 K41 (search for similar items in EconPapers)
Pages: 34
Date: 2022-03-10, Revised 2022-03-28
New Economics Papers: this item is included in nep-ban, nep-his, nep-law, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: A Journey in the History of Sovereign Defaults on Domestic-Law Public Debt (2022)
Working Paper: A Journey in the History of Sovereign Defaults on Domestic Law Public Debt (2021)
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