Hatchondo, Juan; Martinez, Leonardo; Önder, Yasin Kürşat - 2022
) that stipulate a suspension of debt payments when the government faces liquidity shocks in the form of an increase of the … bondholders' risk aversion. We find that in spite of reducing the frequency of defaults triggered by liquidity shocks, introducing … cocos increases the overall default frequency. By mitigating concerns about liquidity, cocos make indebtedness and default …