How to Restructure Sovereign Debt: Lessons from Four Decades

Lee Buchheit, Chanda DeLong, Guillaume Chabert and Jeromin Zettlemeyer ()
Additional contact information
Lee Buchheit: formerly at Cleary Gottlieb Steen & Hamilton
Chanda DeLong: International Monetary Fund
Guillaume Chabert: French Ministry for the Economy and Finance; Paris Club
Jeromin Zettlemeyer: Peterson Institute for International Economics
Authors registered in the RePEc Author Service: Jeromin Zettelmeyer ()

No WP19-8, Working Paper Series from Peterson Institute for International Economics

Abstract: This paper attempts to provide a playbook for the sovereign debt restructuring process, drawing on the experience with sovereign debt restructuring since the 1980s. It begins with a discussion of the participating actors and their interests. It then describes the considerations that must be weighed in designing, negotiating, and concluding a debt restructuring, in light of two problems: asymmetric information between the debtor and the creditors, and creditor coordination problems, which can lead to free riding (the “holdout” problem). The paper focuses on how these problems, which can lead to inefficiently negotiated outcomes, can be managed and minimized in practice.

Keywords: Sovereign debt; financial crises; debt restructuring; debt defaults; Paris Club (search for similar items in EconPapers)
JEL-codes: F34 (search for similar items in EconPapers)
Date: 2019-05
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:iie:wpaper:wp19-8

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