Sovereign Debt of Developing Countries

2016 ◽  
pp. 33-55
Author(s):  
Marilou Uy ◽  
Shichao Zhou
Keyword(s):  
Developing Countries ◽  
Sovereign Debt

Sovereign Debt Restructuring Proposals: A Comparative Look

2003 ◽  
Vol 17 (2) ◽  
pp. 26-33 ◽  
Author(s):  
Thomas I. Palley
Keyword(s):  
Developing Countries ◽  
Economic Efficiency ◽  
Sovereign Debt ◽  
Procedural Fairness ◽  
Debt Restructuring

A range of different solutions, as the contributions to this roundtable show, has been proposed regarding the problem of sovereign borrower insolvency. Two prominent factors need to be taken into account in assessing the merits of each proposal: its impact on economic efficiency, in particular on the supply and price of credit for developing countries, and its regard for considerations of justice and procedural fairness.

scholarly journals Natural Catastrophes and Sovereign Bond Prices

10.28945/3784 ◽  
2017 ◽  
Author(s):  
Burkhard N Schrage
Keyword(s):  
Developing Countries ◽  
Natural Disasters ◽  
Sovereign Debt ◽  
Emerging Market ◽  
Investment Decisions ◽  
Future Research ◽  
Bond Prices ◽  
Sovereign Bond ◽  
Natural Catastrophes ◽  
Parametric Analyses

Aim/Purpose: This study investigates effects of natural catastrophes on the cost of sovereign debt in developing countries and discusses MNC financing strategies. Background: Over the last decades, natural disasters have increased in both number and severity. The combination of higher event frequency and intensity, coupled with fragile economic conditions in emerging market countries, may affect sovereign bond prices—particularly in developing countries—and consequently may have effects on the financing strategy of MNCs Methodology: Parametric and non-parametric analyses and event study method. Contribution: The current literature in International Business research has overlooked natural catastrophes as a source of heterogeneity across countries for investment decisions. We develop the theory and demonstrate empirically that both researchers and practitioners should take into account natural disasters when making internationalization decisions. Findings: We find that natural disasters have a material impact on the bond returns issued by developing country governments and consequently on MNCs’ host-country financing costs. Recommendations for Practitioners: Practitioners may consider the likelihood of natural disasters when making investment decisions in foreign countries. Recommendation for Researchers: Researchers may consider including natural disasters when in internationalization research; our research adds in particular a new dimension to the location choice literature. Impact on Society: Governments—in particular those in emerging markets—may rethink their strategies of how to “insure” themselves against natural disasters. Not being insured against these disasters result in negative secondary effects on economic development through higher cost of capital, and possible through lower FDI activities. Future Research: Future research can be done. There are several avenues: using our insights and applying them to governmental reinsurance strategies would be a worthwhile topic. On a different level, one could also investigate further the contingencies of our findings and extend the theoretical framework towards developed markets.

Do We Have to Rethink Sovereign Debt of Developing Countries?

2021 ◽  
pp. 499-517
Author(s):  
Wissem Ajili
Keyword(s):  
Developing Countries ◽  
Public Debt ◽  
Sovereign Debt ◽  
Debt Management ◽  
Future Generations ◽  
Social Progress ◽  
Comprehensive Management ◽  
Standards Of Living ◽  
Political Choices ◽  
Ecologically Sustainable

The chapter joins new reflections interested in measuring welfare and social progress. The main objective is to determine whether the sovereign debt management process in developing countries is economically viable, socially equitable, and ecologically sustainable. The analysis advocates rethinking the sovereign debt around the idea of social sustainability, that is, the non-questioning of the living conditions of present and future generations and their economic, social, and political choices. The chapter suggests the need for developing countries (1) to ensure a comprehensive management of public debt based on the co-responsibility of both the indebted countries and their creditors, (2) to borrow in priority to finance the most productive investment expenditures, which can have an impact on the populations' standards of living and on economic prosperity, and (3) to reduce the use of austerity programs and anti-social policies.

THE “DARK SIDE” OF CREDIT DEFAULT SWAPS INITIATION: A CLOSE LOOK AT SOVEREIGN DEBT CRISES

2018 ◽  
pp. 1-30
Author(s):  
Hippolyte Wenéyam Balima ◽  
Jean-Louis Combes ◽  
Alexandru Minea
Keyword(s):  
Developing Countries ◽  
Sovereign Debt ◽  
Credit Default Swaps ◽  
The Other ◽  
Dark Side ◽  
Policy Perspective ◽  
Design And Implementation ◽  
Percentage Points ◽  
Credit Default ◽  
Debt Crises

We examine the effect of sovereign credit default swaps (CDS) trading initiation on the occurrence of sovereign debt crises (SDC). Estimations on a large sample of 141 countries for 1980–2013 reveal that, by affecting the fiscal stance, CDS initiation increases by around 1.5 percentage points on average the probability of SDC in countries with CDS compared to the other countries. This result holds for different robustness tests and is found to be stronger for developing countries, for countries with initial lower creditworthiness, and when the degrees of central bank independence and public sector transparency are low. Consequently, compared to existing work emphasizing favorable effects, CDS trading initiation is found to have adverse effects, by increasing the occurrence of SDC. These opposite effects should fuel the literature on measuring the consequences of CDS trading initiation, and its design and implementation from a policy perspective.

Determinants of sovereign debt ratings in clusters of European countries – effects of the crisis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Catarina Proença ◽  
Maria Neves ◽  
José Carlos Dias ◽  
Pedro Martins
Keyword(s):  
Developing Countries ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Time Frame ◽  
European Countries ◽  
Content Type ◽  
Explanatory Variables ◽  
Rating Agencies ◽  
Panel Data Estimation ◽  
The Global Financial Crisis

Purpose This paper aims to study the determinants of the sovereign debt ratings provided by the 3 main rating agencies for 32 European countries. It verifies the clusters of countries existing for each of the agencies, considering regional bias, and then analyzes whether the determinants were different before and after the global financial crisis. It also aims to explain how the determinants are taken into account for rich and developing countries, using a sample for the period between 2001 and 2008 and the period between 2009 and 2016. Design/methodology/approach To this purpose, this paper performs panel data estimation using an ordered Probit approach. Findings This method shows that for developing countries after the crisis, the relevant explanatory variables are the unemployment rate and the presence in the Eurozone. For rich countries, the inflation rate is pivotal after the crisis period. Originality/value This paper is the first to use a clustering methodology within sovereign debt rating literature, grouping the countries into cohesive clusters according to their sovereign debt ratings along with the proposed time frame. Moreover, it explains, which countries belong to strong or weak groups, according to the rating agencies under discussion; and, in these groups, it identifies the sovereign rating determinants.

Curbing ‘Vulture Fund’ Litigation

2018 ◽  
pp. 498-513
Author(s):  
Cephas Lumina
Keyword(s):  
Developing Countries ◽  
Human Rights ◽  
Sovereign Debt ◽  
Legal Framework ◽  
Sovereign Immunity ◽  
Debt Restructuring ◽  
Predatory Behaviour ◽  
International Debt ◽  
Full Face ◽  
The Impact

The lack of an international legal framework for the restructuring of sovereign debt, and the voluntary nature of current international debt restructuring initiatives have created opportunities for predatory private commercial entities—called ‘vulture funds’—to acquire defaulted sovereign debts at substantial discounts, refuse to participate in debt restructurings and aggressively pursue repayment of the full face value of the debt through litigation, often in multiple jurisdictions. This chapter discusses current official initiatives designed to curb vulture fund litigation and proposes a rethink of the doctrine of sovereign immunity as a key measure to curb the predatory behaviour of ‘vulture funds’. It also discusses the impact of the activities of these 'vulture funds’ on the realisation of human rights, particularly in developing countries, as well other consequences for the countries targeted by ‘vulture funds’

scholarly journals The Global South Debt Revolution That Wasn’t

2021 ◽  
pp. 232-256
Author(s):  
Quentin Deforge ◽  
Benjamin Lemoine
Keyword(s):  
Developing Countries ◽  
Sovereign Debt ◽  
Financial Analysis ◽  
Division Of Labour ◽  
International Crises ◽  
Financial Architecture ◽  
International Financial Architecture ◽  
Fair Principles ◽  
Analysis System ◽  
Recent Project

In this article, we analyse how international crises and conflicts over sovereign debt have transformed the agenda of the United Nations Conference on Trade and Development (UNCTAD), the Geneva-based organization founded in 1964 and whose history is closely linked to the G77 group of developing countries. We show how UNCTAD’s projects for structural reform of the international financial architecture were contested and ultimately rejected in the 1970s. Such defeats were a blow to the transformative goals that UNCTAD had initially set to achieve. In the 1980s, UNCTAD gradually became a technical agency and its mandate restricted to providing expert assistance and support to developing countries during their negotiations with the Paris Club. Meanwhile, the mandate to produce expertise at the macro level (the so-called ‘upstream’ area), was effectively transferred to the IMF and World Bank. With the development of the Debt Management Financial Analysis System (DMFAS), UNCTAD went from promoting systemic change in international financial architecture to sponsoring the micro-management of domestic policies as remedy to over-indebtedness. But we also show that UNCTAD did not always restrict itself to doing such ‘downstream’ work, i.e., improving debt issuing capacities and technologies of developing countries. While UNCTAD’s recent project on fair principles of lending and borrowing principles conforms to what’s expected from the group of advanced countries, another project involving the creation of an international mechanism of sovereign debt restructuring functioned as a disturbance to this fragile downstream–upstream division of labour between international organizations.

scholarly journals Democracy's Spread: Elections and Sovereign Debt in Developing Countries

2003 ◽  
Author(s):  
Paul M. Vaaler ◽  
Steven Block ◽  
Burkhard N. Schrage
Keyword(s):  
Developing Countries ◽  
Sovereign Debt
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