The decade and a half of litigation that followed Argentina's sovereign bond default in 2001 ended with a great disturbance in the Force. A new creditor weapon had been uncloaked: The prospect of a court injunction requiring the sovereign borrower to pay those creditors that decline to...

During the European sovereign debt crisis of 2011-13, some nations faced with rising borrowing costs adopted commitments to treat bondholders as priority claimants. That is, if there was a shortage of funds, bondholders would be paid first. In this article, we analyze the prevalence and variety...

Puerto Rico has incurred debt well beyond its ability to repay. It attempted to address its fiscal woes through legislation allowing the restructuring of some its debt. The Supreme Court put a stop to this effort, holding that Congress in the Bankruptcy Code barred the Commonwealth from enacting...

Why do almost all sovereign nations list their international bonds on stock exchanges? We examine several hypotheses for what drives sovereigns to list and where. In particular, we test the often invoked “bonding hypothesis,” which posits that exchanges perform a certification and monitoring...

• The IMF staff's 2013 proposal to reprofile (i.e., stretch out for a short period without haircutting principal or interest) the maturing debt of a country that has lost market access is a sensible policy in cases where the IMF is uncertain whether the country's debt stock is sustainable.•...

Commercial databases now make available to paying clients information about the legal terms in sovereign loan contracts. This information is important to academic researchers, to policy institutions such as the International Monetary Fund, and to investors and other market actors. For a random...

Collective Action Clauses (CACs) are back at the forefront of financial crisis response, this time in Europe. In the absence of a sovereign bankruptcy regime, CACs help solve coordination problems in sovereign bonds by binding all bondholders to the terms of a debt restructuring approved by the...

Unnoticed in the literature on sovereign bonds, an innovation has been taking place over the past decade and a half. Starting with a single issuance in 2006 by Mexico and two issuances by Brazil in 2007, some issuers have been using “doomsday” or “make whole” call provisions. These are...

English Abstract: There is a growing consensus that Venezuela will not be able to persist for much longer with its policy of full external debt service. The social costs are just too great. This implies a debt restructuring of some kind. Venezuela, principally through its state-owned oil...

On June 11, 2017, Puerto Rico held a referendum on its legal status. Although turnout was low, 97% of ballots favored statehood over independence or the status quo. The federal government, however, has financial and political reasons to resist this preference: Puerto Rico would bring with it a...