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The Seniority Structure of Sovereign Debt

Matthias Schlegl, Christoph Trebesch and Mark Wright ()

No 13692, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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: Arrears; IMF; Insolvency; International financial architecture; official debt; Pecking order; priority; Sovereign bonds; sovereign default (search for similar items in EconPapers)
JEL-codes: F3 F4 F5 G1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-opm
Date: 2019-04
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Related works:
Working Paper: The seniority structure of sovereign debt (2019) Downloads
Working Paper: The Seniority Structure of Sovereign Debt (2019) Downloads
Working Paper: The Seniority Structure of Sovereign Debt (2019) Downloads
Working Paper: The seniority structure of sovereign debt (2019) Downloads
Working Paper: The Seniority Structure of Sovereign Debt (2018)
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