Optimal Debt Exchange Offers

Pierre Mella-Barral

No 1995022, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: This paper examines the pricing and efficiency implications of debt exchange offers. The continuous-time model employed yields simple asset pricing formulae as well as closed-form solutions for the parameters characterising optimal debt exchanges offers. Polar cases are examined in which the debt is either held by a single bank or by many bond-holders, that is respectively private or public debt. A comparative analysis of the efficiency properties of each form of debt yields the interesting finding that under the often criticised exit-consent provision, optimal public debt exchange offers are ex-ante the most efficient.

Keywords: exchange offers; corporate bonds; agency costs (search for similar items in EconPapers)
JEL-codes: G12 G32 G33 (search for similar items in EconPapers)
Pages: 41
Date: 1995-05-01
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Citations: View citations in EconPapers (9)

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Working Paper: Optimal Debt Exchange Offers (1995)
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