This paper develops a new model of debt renegotiation in a structural framework, that accounts for both taxes and … coupon reduction to creditors, given that the new coupon is chosen such that debt value remains constant. Our result shows … firm without hurting the creditors. This model of debt renegotiation can be viewed as a way of passing from a junk bond to …

particular, the interplay between government debt and private leverage is attracting increasing attention in the current context …The policy focus on excessive leverage in the euro area has raised interest in developing comprehensive analytical … approaches to better understand the interrelationship between leverage and deleveraging processes across economic agents. In …