In late 2008, Ecuador launched a successful effort to restructure its external debt, the circumstances of which are unique in the recent history of sovereign debt restructurings. The country had a rocky history of debt repayment, but after restructurings in 1995 and 2000, it had arguably...

We offer an analytical framework for studying "pre-emptive" debt exchanges. Countries can tailor a sovereign bankruptcy framework by choosing provisions (or "haircuts") ex ante, but must contend with the market discipline of holdout litigation ex post. Secondary markets play a role in shaping...

This paper studies the relationship between sovereign debt default and (short term) GDP growth taking into account the depth of a debt restructuring and distinguishing between commercial and official sovereign debt restructurings. Analyzing default episodes in 117 countries over the period...

An unacknowledged fact about the Bankruptcy Code's definition of "insolvent" is that it requires unmatured interest to be counted as debt. Ignored in practice, this statutory requirement makes no economic sense, but remains a trap awaiting a litigant in front of a court compelled to apply the...

A credit default swap (CDS) contract provides insurance against default. After a country defaults, the country and its lenders usually negotiate over the share of the defaulted debt to be repaid. This paper incorporates CDS contracts into a sovereign default model and demonstrates that the...

Argentina's "default" of its rescheduled debt has brought out the multiple vested interests or stakeholders involved. This includes not only Argentina and the vulture funds which are insisting on prioritized full payments, but also the majority bondholders who agreed to rescheduling and the...

We study the relationship between default and the maturity structure of the debt portfolio of a Sovereign, under uncertainty. The Sovereign faces a trade-off between a future costly default and a high current fiscal effort. This results into a debt crisis in case a large initial issuance of long...