The seniority structure of sovereign debt

Matthias Schlegl, Christoph Trebesch and Mark Wright

No 2129, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

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: Sovereign default; Arrears; Insolvency; Priority; IMF; Official Debt; Sovereign bonds; International Financial Architecture; Pecking Order (search for similar items in EconPapers)
JEL-codes: F3 F4 F5 G1 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-opm
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Citations: View citations in EconPapers (30)

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https://www.econstor.eu/bitstream/10419/202326/1/1672131197.pdf (application/pdf)

Related works:
Working Paper: The seniority structure of sovereign debt (2019)
Working Paper: The Seniority Structure of Sovereign Debt (2019)
Working Paper: The Seniority Structure of Sovereign Debt (2019)
Working Paper: The Seniority Structure of Sovereign Debt (2019)
Working Paper: The Seniority Structure of Sovereign Debt (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:2129

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