Suchergebnisse

The latest Argentinean debt restructuring was the first time the resolution of a modem financial crisis was completely handed over to the private financial markets without official intervention by public institutions. We argue that the resulting harshest haircut for private creditors in history can be related to a stag-hunt game played by creditors. We show that incentive schemes provided by the Argentinean government were factors facilitating this haircut. The analysis suggests that, contrary to the recognition in the literature, the effects of Collective Action Clauses and Exit Consents within a restructuring process are not equal. In the case of Argentina the inclusion of Collective Action Clauses in the defaulted bonds could have benefited the holdout creditors.

Over the past few years, Japan has slowly entered into the process of bad debt restructuring. This process is taking place in two phases: an initial phase of bad debt restructuring, namely the consolidation of ownership of bad assets, which is now surfacing as bad asset receptors are being established; and a second phase, regarding the dispersion of ownership of bad assets, which has not yet emerged but will occur gradually over the next five years. The author explores a range of investment opportunities that are emerging as this restructuring process takes place. Particularly, two developments from last summer - the establishment of the Housing Loan Administration Corporation and the Resolution and Collection Bank - indicate that borrowers from Jusen companies and failed credit co-ops are no longer supported by the Japanese banking system. These borrowers, largely real estate developers many of whom are already technically insolvent, have been left with no other alternative but significant reorganization including the total liquidation of assets. Opportunities are arising from these bankruptcy/liquidation sales. Another area of opportunity lies in the increasing consolidation among banks, particularly among smaller shinking and second-tier regional banks which have been left without any specific official rescue packages due to the current political climate. As they consolidate there will be a further growth of opportunities for investors.

The latest Argentinean debt restructuring was the first time the resolution of a modem financial crisis was completely handed over to the private financial markets without official intervention by public institutions. We argue that the resulting harshest haircut for private creditors in history can be related to a stag-hunt game played by creditors. We show that incentive schemes provided by the Argentinean government were factors facilitating this haircut. The analysis suggests that, contrary to the recognition in the literature, the effects of Collective Action Clauses and Exit Consents within a restructuring process are not equal. In the case of Argentina the inclusion of Collective Action Clauses in the defaulted bonds could have benefited the holdout creditors.

This paper explores patterns of discrimination between residents and foreign creditors during recents sovereign debt restructurings. We analyze 10 recent episodes distinguishing between neutral cases in which the sovereign treated creditors equitably irrespective of their nationality and instances of discrimination against residents and non-residents. We then present evidence in support of the hypothesis that these patterns of discrimination can be explained by the origin of liquidity pressures, the ex ante soundness of the banking system and the extent of the domestic corporate sector's reliance on international financial markets. On the theoretical side, we present a simple model of a government's strategic decision to diferentiate between the servicing of its domestic and its external debt. In our model, the basic trade-off facing the authorities is to default on external debt and in so doing restricting private access to international capital markets or to default on domestic debt, thereby curtailing the banking sector's capacity to lend to domestic firms

Emerging countries that have defaulted on their debt repayment obligations in the past are more likely to default again in the future than are non-defaulters even with the same external debt-to-GDP ratio. These countries actually have repeated defaults or restructurings in short periods. This paper explains these stylized facts within a dynamic stochastic general equilibrium framework by explicitly modeling renegotiations between a defaulting country and its creditors. The quantitative analysis of the model reveals that the equilibrium probability of default for a given debt-to-GDP level is weakly increasing with the number of past defaults. The model also accords with an additional fact: lower recovery rates (high NPV haircuts) are associated with increases in spreads at renegotiation.--Abstract

Abstract
The timely and orderly resolution of sovereign debt crises has long been a key challenge facing the global financial architecture. The framework for crisis resolution evolved in response to the capital account crises of the 1990s (Mexico, Russia, Southeast Asia), the Argentine crisis of 2001 and its aftermath, and the Global Financial Crisis of 2008–9 which morphed into the Euro area debt crisis of 2010–12. Efforts to expedite crisis resolution involved a two-pronged approach, one focusing on IMF policies and lending facilities and the other on ways to overcome the collective action problems involved in restructuring securitized debt. This paper examines these efforts in the context of the crises that triggered them and provides some guidance for the future. It argues that the way forward involves action on several fronts, including restoration of the essential principle that IMF programs should aim at reaching a manageable debt position within the program period with a high probability.