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Haircuts: Estimating Investor Losses in Sovereign Debt Restructurings, 1998–2005

This paper estimates bond-by-bond “haircuts”—realized investor losses—in recent debt restructurings in Russia, Ukraine, Pakistan, Ecuador, Argentina, and Uruguay. We consider both external and domestic retructurings. Haircuts are computed as the percentage difference between the present values of old and new instruments, discounted at the yield prevailing immediately after the exchange. We find average haircuts ranging…

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The Problem that Wasn’t: Coordination Failures in Sovereign Debt Restructurings

Contrary to widespread expectation, debt renegotiations in the era of bond finance have generally been quick and involved little litigation. We present a model that rationalizes the initial fears and offers interpretations for why they did not materialize. When the exchange offer is sufficiently attractive vis-à-vis holding out, full participation can be an equilibrium. Legal…

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Who Lost Greece? The Geopolitical Consequences of the Greek Crisis

In the maelstrom of the European economic crisis, the geopolitical consequences of Greece‘s weakening and [at least theoretically] possible collapse have been largely ignored by analysts and decision-makers. This paper is making no effort to absolve Greece of its substantial responsibility. It will argue that Greece‘s (and Europe‘s) crisis is mainly –but not exclusively- economic…

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