Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
10477061 | Journal of International Economics | 2005 | 19 Pages |
Abstract
This paper develops a simple theoretical model to analyse recent proposals on restructuring of sovereign bonds. We find that collective action clauses (CACs) inserted in bonds resolve the inefficiencies caused by intra-creditor coordination problems providing that all parties have complete information about each other's preferences. In such a world, statutory mechanisms, such as international bankruptcy courts, are unnecessary. This is no longer the case when the benefits from reaching a restructuring agreement are private information to the debtor and its creditors due to inefficiencies caused by the debtor-creditor bargaining problem.
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Authors
Andrew G. Haldane, Adrian Penalver, Victoria Saporta, Hyun Song Shin,